Shares of Taiwan Semiconductor Manufacturing, a major supplier of chips to Nvidia and Apple, advanced on Wednesday after the world's largest third-party chipmaker reported a rise in sales.
Taiwan Semiconductor
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U.S. depository receipts rose 1.5% to $187.39 in early trade. Coming into the session, they had gained 77 percent this year.
The sales show that demand for high-powered chips to run artificial intelligence software is strong. Taiwan Semiconductor dominates the advanced chip manufacturing market, including the 3-nanometer and 2-nanometer chips expected to power the next generations of smartphones.
News from Taiwan Semiconductor was boosting shares of other chip and tech stocks. Nvidia shares rose 1.5% to $133.28 and Apple climbed 0.9% to $230.79 in premarket trading. Advanced Micro Devices was growing by 1.4 percent.
According to Mizuho analyst Jordan Klein, the move looks like a comeback in technology hardware stocks after software stocks outperformed in June.
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“What I'm learning about investor sentiment and investing in 2024 with AI is that it's a FOMO. [fear of missing out] Driven market… so when you see anything improve / sound better due to AI-related capex spending, the stock rerates in a flash because the money goes long,” Klein wrote.
Taiwan Semi said revenue for June came to NT$207.87 billion ($6.38 billion), up 33 percent from the same period a year ago, and second-quarter sales rose 40 percent to NT$673.51 billion ($20.68). billion).
Second-quarter sales beat the company's most recent forecast for sales between $19.6 billion and $20.4 billion. Taiwan Semi is set to officially report its second-quarter earnings on July 18, and has forecast an operating margin of 40%-42%.
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The company did not provide a breakdown of its revenue, but Wedbush analyst Matt Bryson said growth appeared to be driven by server demand.
“We are phasing out our pricing assumptions for 2026, so we expect modest price increases with HPC to improve. [high-performance computing] Demand will remain strong to lift our 2025 revenue, margin, and EPS estimates,” said Bryson.
Bryson raised its price target on Taiwan-listed Semi shares to NT$1,175 from NT$900 previously. The Taipei-listed stock closed up 0.5% at NT$1,054 on Wednesday.
Write to Adam Clark at adam.clark@barrons.com and Brian Swint at brian.swint@barrons.com