TSMC stock rides Nvidia's AI wave to best week in more than a year
By Wallace Witkowski
Chip fabricator that partners with Nvidia likely to see more demand, but analyst says it will only be a 'slight positive' because Nvidia captures most of the revenue
U.S. shares of Taiwan Semiconductor Manufacturing Co. rode the wind behind Nvidia Corp.'s record revenue forecast to their best week in nearly a year and a half.
TSM (2330.TW) shares rose 12% Thursday as Nvidia Corp.'s stock (NVDA) soared in response to news of a wave on expected sales of chips used for generative artificial intelligence, then added another 2.2% Friday. The stock finished the week up 11.5%, the best percentage gain in a week since the one ending Jan. 14, 2022.
With a 22.4% gain month to date already, shares also aren't far from their best month since January, when shares finished up 24.5%. That follows a 34.8% gain in November 2022.
In April, the Chip fabricator, or "fab" -- industry parlance for the high-tech factories where billions of transistors are etched onto silicon wafers to make chips -- trimmed its outlook but kept its capex forecast intact.
Read: Nvidia stock soars toward all-time high as record revenue forecast backed by 'killer app' of AI
Wedbush analyst Matt Bryson who covers Nvidia, said he expects TSMC to get a "slight positive" from Nvidia. "TSMC certainly benefits from Nvidia's success, but the absolute revenue contribution to TSMC is more modest given Nvidia's elevated margins on its data center GPUs."
Those elevated margins from data-center sales are expected to help Nvidia bounce back from a tough inventory year, Nvidia Chief Financial Officer Colette Kress told MarketWatch in an interview late Thursday.
Nvidia sells data-center chips to cloud service providers, or "hyperscalers," such as Microsoft Corp.'s (MSFT) Azure, Amazon.com Inc.'s (AMZN) AWS, Alphabet Inc.'s (GOOGL)(GOOGL) Google Cloud Platform, and Oracle Corp.'s (ORCL) Cloud Infrastructure, as well as consumer-internet companies and large businesses. Those companies are all looking to leverage generative AI, and are looking for more compute power at lower energy levels.
While considered the GPU leader in the data center, Nvidia still dukes it out with rival Advanced Micro Devices Inc. (AMD) and Intel Corp. (INTC), and is attempting to challenge those companies in the CPU market as well.
Read: Broadcom stock streaks to record high on hopes for Apple deal
TSM shares are up 38.6% year to date, while the PHLX Semiconductor Index is up 40%, the S&P 500 index is up 9.5%, and the and the tech-heavy Nasdaq Composite Index has gained 24%. Nvidia shares, meanwhile, are up 166.5% year to date.
-Wallace Witkowski
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May 30, 2023 08:23 ET (12:23 GMT)
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