(Reuters) – U.S. chip stocks rose before the bell on Thursday after strong sales forecast from TSMC (TSM, 2330.TW) fueled investor optimism about demand for processors used to power artificial intelligence applications.
Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker, raised its forecast for annual revenue growth and said sales of AI chips would account for a mid-teens percentage of annual revenue.
The forecast from the leading maker of advanced AI chips boosted investor confidence in the prospects for chip makers whose market values have soared over the past two years due to a surge in chip spending by Big Tech.
U.S.-listed TSMC shares rose 7%, with the company’s market capitalization expected to top $1 trillion if premarket gains hold.
TSMC customer and AI chip leader Nvidia (NVDA) and smaller rival AMD (AMD) both gained more than 2%. Network chip maker Broadcom (AVGO), smartphone semiconductor maker Qualcomm (QCOM) and memory chip supplier Micron (MU) rose between 1.5% and 3%.
Shares of troubled chipmaker Intel (INTC) also rose higher. Intel has been expanding its chip manufacturing facilities in an effort to challenge TSMC in advanced contract manufacturing – an endeavor that analysts say will take years.
TSMC’s prospects also offered investors some reprieve after deep forecasts from chipmaker ASML raised fears of a slower-than-expected recovery in demand for semiconductors not used in AI.
US-listed shares of TSMC are up more than 80% so far this year, while Nvidia has more than doubled, as investors pour billions of dollars into semiconductor stocks amid booming pick-and-creature trading on Wall Street.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Maju Samuel)
