In a remarkable turn of events on Thursday, the semiconductor sector witnessed a substantial surge, with the semiconductor index (.SOX) soaring more than 2%.
In a remarkable turn of events on Thursday, the semiconductor sector witnessed a substantial surge, with the semiconductor index (.SOX) soaring more than 2%.
The rally was propelled by Taiwan Semiconductor Manufacturing (TSMC), the world’s largest contract semiconductor maker, which reported robust demand for high-end chips used in artificial intelligence (AI).
The U.S.-listed shares of TSMC, responding to the positive news and its optimistic 2024 revenue forecast of over 20% growth, climbed an impressive 7.2%, claiming the top spot as the day’s biggest percentage gainer on the semiconductor index.
The broader market also felt the impact, with the S&P 500 (.SPX) experiencing a 0.3% increase, indicating the significant role played by the semiconductor industry in influencing market trends.
The semiconductor index, having witnessed a remarkable 65% rise in 2023, reached an all-time intraday high on December 28, touching 4,233.73. This surge has been attributed to the increasing optimism surrounding AI demand and the essential role played by semiconductors in this technological revolution.
Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York, emphasized the critical nature of the semiconductor industry, stating, “With basic semiconductors – that’s a supply and demand business… but I think you’re going to continue to hear chatter about AI, and it will translate into huge revenue growth for a lot of these companies.” Ghriskey sees the current period as the early stages of a technological revolution, underscoring the potential for substantial growth in the semiconductor sector.
The news of TSMC’s strong performance echoes a trend in the industry, with Nvidia (NVDA.O) also making headlines. On January 8, Nvidia, considered the world’s most valuable chipmaker, achieved a record close after unveiling new desktop graphics processors designed to harness the power of AI. Nvidia is widely recognized as the leading supplier of processors used in AI computing, and its shares responded positively, recording a 1% increase and reaching a fresh record peak on the session.
Nvidia’s stock has seen remarkable growth, climbing approximately 14% since the start of the year after having more than tripled in 2023. The company’s success underscores the increasing reliance on AI technologies and the pivotal role played by semiconductor companies in driving innovation.
As the semiconductor industry continues to ride the wave of AI demand, analysts and investors remain optimistic about the potential for substantial revenue growth. The technological revolution is unfolding, and semiconductor stocks are positioned at the forefront, contributing not only to the advancement of technology but also shaping the broader market landscape.