By Adam Clark
Chip stocks were gaining on Monday as Taiwan's Foxconn gave the latest indication that demand for artificial-intelligence infrastructure is set to boom this year.
Foxconn, an assembler of Apple and Nvidia products formally known as Hon Hai Precision Industry, said Sunday that its quarterly revenue rose 15% on the year to 2.132 trillion New Taiwan dollars ($64.75 billion). Foxconn recorded annual sales growth in almost all of its major segments, driven by demand for AI servers.
The news boosted stocks across the semiconductor supply chain. American depositary receipts of Taiwan Semiconductor Manufacturing rose 4.3% Monday morning, while ADRs of ASML, the Dutch supplier of chipmaking equipment, were up 5.6%.
Among U.S. companies, memory chip maker Micron Technology rallied 10%, at least partly because high-bandwidth memory chips the company makes are needed as a component of the latest processors from the likes of Nvidia. Chipmaking equipment stocks were also gaining, with Applied Materials up 5.4%, KLA rising 5.5%, and Lam Research up 6.2%.
The news from Foxconn comes amid other signs of strong AI demand.
Microsoft said Friday it plans to invest $80 billion in fiscal 2025 to build AI-enabled data centers, with more than half of the spending in the U.S. OpenAI CEO Sam Altman said Monday that customers are using so much AI computing with its ChatGPT Pro product that the start-up is losing money on its $200-a-month subscription deals.
The value of the AI server business is set to rise to $298 billion this year from $205 billion in 2024, according to research firm TrendForce. It expects AI servers to account for more than 70% of the total value of the entire server industry in 2025.
Write to Adam Clark at adam.clark@barrons.com
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(END) Dow Jones Newswires
January 06, 2025 10:48 ET (15:48 GMT)
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