TSMC's Optimistic Forecast Boosts Market
TSM 
NVDA 
Major Asian chipmaking and technology stocks experienced a significant surge following Taiwan Semiconductor Manufacturing Co’s (TSMC) better-than-expected earnings and its optimistic outlook on artificial intelligence (AI) demand. TSMC’s CEO, C.C. Wei, highlighted the improved demand for the company’s most advanced chips and emphasized its advantageous position to capitalize on the burgeoning AI development. This positive forecast not only impacted the Asian market but also triggered a rally in global tech equities.
TSMC’s shares rose over 5% in Taiwan trade, reaching a near two-year high, after reporting a smaller-than-expected decline in its fourth-quarter earnings. The company’s bullish outlook on AI demand spurred a surge in Asian chipmaking stocks such as Samsung Electronics, SK Hynix, and Advantest Corp. Moreover, U.S. chipmaking majors like NVIDIA Corporation also rebounded on the prospects of increased interest in AI development. The release of OpenAI’s Chat GPT tool in late-2022 further fueled the AI-fueled demand, contributing to the heightened interest in the tech sector.
TSMC’s optimistic outlook on AI-driven chip demand led to a substantial rise in its Taipei-listed and US-listed shares, impacting both Asian and international stock markets positively. The broader Taipei market also experienced a significant increase, with foreign investors buying a net T$80.2 billion in stocks, the second-highest figure on record. Furthermore, TSMC’s plan to evaluate building a third fab in Taiwan’s Kaohsiung city to produce advanced 2 nanometre chips provided a boost for the government and the economy.
The Impact on Asian Stock Markets and the Tech Sector
The positive forecast from TSMC fueled gains in the broader Asian technology stocks. Most Asian stocks rose on Friday following TSMC’s encouraging outlook and cues from Wall Street. However, concerns over China and uncertainty over early U.S. interest rate cuts put most Asian bourses on course for a negative week. While Asian tech stocks surged, most markets were set for weekly losses. The regional performance varied, with Japan’s Nikkei 225 being the best performer and China’s indexes lagging their peers. Japan’s Nikkei 225 index was the best regional performer, rising 1.6% and once again coming in sight of a 34-year high.
Moreover, TSMC’s projection of over 20% growth in 2024 revenue due to the booming demand for high-end chips used in AI significantly impacted the semiconductor industry. This surge in demand for high-end chips used in AI led to a rise in semiconductor stocks by more than 2% on Thursday. TSMC’s positive outlook and its robust performance influenced the broader Asian and international stock markets.
TSMC’s optimistic outlook on AI-driven chip demand drove a surge in its Taipei-listed shares by 6.5% and its US-listed stocks by almost 10%, impacting Asian and international stock markets positively. This bullish forecast also led to a significant rise in the broader Taipei market, with foreign investors buying a net T$80.2 billion in stocks, the second highest figure on record. Other Taiwanese tech firms, such as Quanta and Wistron, experienced surges in stock value as well. TSMC’s plan to evaluate building a third fab in Taiwan’s Kaohsiung city to produce advanced 2 nanometre chips also provided a boost for the government and the economy.
The surge in semiconductor stocks was driven by strong demand for high-end chips used in artificial intelligence. TSMC’s shares closed 6.5% higher on Friday in Taipei, and its US-listed stocks closed up almost 10% overnight. The broader Taipei market ended up 2.6%, marking its biggest percentage rise for a year. Foreign investors bought a net T$80.2 billion ($2.55 billion) in stocks, the second highest figure on record. AI server and component makers Quanta and Wistron’s stocks jumped 8.4% and 9.5%, respectively. TSMC is evaluating building a third fab in southern Taiwan’s Kaohsiung city to produce advanced 2 nanometre chips.
The Surge in Semiconductor Stocks and TSMC’s Positive Forecast
The rise in semiconductor stocks by more than 2% on Thursday was attributed to the strong demand for high-end chips used in artificial intelligence. TSMC cited this robust demand for high-end chips as a key driver for the surge in semiconductor stocks. The S&P 500 also experienced a 0.3% increase, with U.S.-listed shares of TSM rising by 7.2%. The semiconductor index had a remarkable 65% surge in 2023, hitting an all-time intraday high on Dec. 28 of 4,233.73, boosting the overall market amid optimism over AI demand. Nvidia, a leading supplier of processors used in AI computing, saw its shares increase by about 14% to start the year after having more than tripled in 2023.
The positive outlook from TSMC had a ripple effect, contributing to a surge in semiconductor stocks and driving a bullish trend in the tech sector. The surge in demand for high-end chips used in AI was a key factor in the rise of semiconductor stocks and the overall market optimism. Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York, emphasized the potential for huge revenue growth for companies amid the ongoing technological revolution.
By emphasizing the robust AI-driven demand and the potential revenue growth, TSMC’s positive forecast significantly influenced the performance of semiconductor stocks and the broader tech sector. The surge in semiconductor stocks and the broader market optimism underscore the pivotal role of AI-driven demand in shaping the trajectory of the semiconductor industry and the technology sector as a whole.
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