Taiwanese semiconductor manufacturing (NYSE: TSM) The shares are posting big gains in Wednesday’s trading. The chipmaking leader’s stock price was up 4.8% as of 2:15 p.m. ET, according to data from S&P Global Market Intelligence.
While there wasn’t much company-specific news pushing the company’s stock price higher, TSMC stock benefited from some favorable economic data and a continued rally for artificial intelligence (AI) stocks. Consumer Price Index (CPI) figures released by the U.S. Bureau of Labor Statistics show inflation came in slightly lower than expected in May, and the report helps fuel continued gains for growth-dependent tech stocks.
TSMC stock is rising in a bullish macro environment
Growth investors got some good news with the new CPI data released today. The CPI, which tracks the change in prices of a combined group of goods, showed costs rose 3.3% year-on-year in May and remained stable month-on-month.
While that may not be much comfort to shoppers who continue to feel the pinch of inflationary pressures, the increase came in lower than most economists expected. Inflation was widely expected to rise 3.4% year over year and then rise 0.1%.
After better-than-expected CPI data, investors became more optimistic about growth stocks. The news in particular resulted in big profits Nvidia stock. Gains for Nvidia have often led to strong performances for other big names in the AI space, and the combination of bullish catalysts is contributing to gains for TSMC.
What comes next for TSMC stock?
TSMC remains the leading manufacturer of high-performance semiconductor stocks used for artificial intelligence, data centers and accelerated computing applications. For investors looking for ways to profit from the rise of AI, the stock remains a valuable long-term buy.
On the other hand, there is a very important risk factor that must be taken into account. Many geopolitical analysts believe there is a good chance that China will exert greater control over Taiwan within the next five years. Gaining more control over TSMC and its advanced chip manufacturing capabilities could be a key driver for such a move, and that could spell trouble for investors.
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Keith Noonan has no positions in the stocks mentioned. The Motley Fool holds positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
Why TSMC Stock Is Jumping Today was originally published by The Motley Fool
