Chipmaker shares gain as AI data center demand wave widens beyond Nvidia

Recasts throughout, updates share moves

By Akriti Shah

Jan 28 (Reuters) - Shares of chipmakers rallied on Wednesday, boosted by surging demand for AI data center hardware, while upbeat results from Texas Instruments and other manufacturers signaled that momentum is widening beyond Nvidia's high-end processors.

Texas Instruments TXN.O makes analog chips for converting signals and managing power in data centers, unlike Nvidia's NVDA.O fast, high-priced AI graphics chips, and has benefited from a surge in demand from technology companies ramping up compute infrastructure to power their AI ambitions.

Shares of Texas Instruments rose about 8.5%. Seagate STX.O jumped 17.7%, while ASML ASML.AS dipped 2.3%, having gained as much as 7.5% earlier in the day. Other AI‑linked chipmakers including Nvidia NVDA.O, Micron MU.O, AMD AMD.O and Intel INTC.O were trading higher, extending a sector-wide rally.

The Philadelphia SE Semiconductor index .SOX rose 1.7%.

The sector also got a boost following a Reuters report that said China had given the green light to three of its largest tech companies to buy Nvidia's H200 artificial intelligence chips.

"Companies across the broader supply chain, by which we mean the buyers and customers of the major tech names, are reporting that conditions are improving and that they are expanding their growth plans," said Louise Dudley, portfolio manager for global equities at Federated Hermes.

"That confidence is feeding through to tech, where spending decisions by CEOs and CTOs depend heavily on broader sentiment."

Sector momentum was underscored on Wednesday as Texas Instruments' rosy quarterly forecast showed the AI data‑center boom is driving chip demand beyond Nvidia’s advanced processors.

European chip equipment leader ASML also delivered a blowout fourth quarter on Wednesday. The company, whose bookings were nearly double what analysts had estimated, also raised its 2026 revenue outlook.

"ASML just delivered a thumping set of numbers, with new orders blowing past expectations and pointing to a market gearing up for the next leg of growth," said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

"Memory makers in particular are rushing to buy ASML's machines, and the strength of service revenues shows that fabs are running their kit harder again."

Data storage giant Seagate raised its forecasts on Tuesday, citing nearline capacity now fully allocated through 2026 and strengthened visibility through 2027 with long-term agreements.

Tech earnings are being driven by the AI boom and overall U.S. corporate growth in the fourth quarter, seen growing about 27%, versus 9.2% growth overall for S&P 500 companies, according to LSEG data. Revenue growth from the tech sector was pegged at about 18%, versus the 7.3% for S&P 500 overall.

However, the global shortage of memory chips has cast a shadow over end-market demand in personal electronics, with researchers expecting sales of smartphones and personal computers—a key market for TI—to be impacted.

Still, Morgan Stanley believes a supply shortage for TI is unlikely due to low factory utilization worldwide, though geopolitical risks remain unpredictable and U.S.-focused production could expose TI to tariffs abroad.

(Reporting by Akriti Shah, additional reporting by Sruthi Shankar in Bengaluru; Editing by Maju Samuel)

((akriti.shah@thomsonreuters.com))