To The Moon

As we have seen semiconductor sector stocks staging a comeback this week, on Monday (23 Sep) TSMC (TSM) have a +0.4% up after a Wall Street Journal report mentioned that TSMC and Samsung are considering new chip-making facilities in the United Arab Emirates.

$Taiwan Semiconductor Manufacturing(TSM)$ continue to gain +4.13% on Tuesday (24 Sep) after news reported that TSM Secures $7.5B Boost for Arizona Expansion, Aims for Advanced Chip Production.

The worthy note would be $NVIDIA Corp(NVDA)$ waking up from its slumber after NVDA CEO selling of shares activity should be coming to an end. Another factor that help to push NVDA up was the news that Nvidia prepares to begin shipping its highly anticipated Blackwell GPU during the fourth quarter.

TSM and NVDA was up more than 3% at the end of trading session on 24 Sep 2024.

So in this article I want to look at which semiconductor is going to benefit the most as we see coming generative AI bloom.

Coming Generative AI Boom See Taiwan Benefitting

Generative AI has become one of the leading technologies in the artificial intelligence boom. Generative AI is an algorithm that uses deep learning to generate new content through text, image, audio, music, or video. It accomplishes its task by “analyzing large amounts of data to learn patterns and then use that information to predict what would come next in a sequence.”

In 2023, OpenAI’s ChatGPT, a chatbot that can generate human-like text responses to questions and props, kicked off the proverbial tsunami wave of demand for AI. Thanks to continued development in AI and the components that power it, interest is only compounding each month. As the benefits of AI applications become more apparent, numerous enterprises are setting up strategies to integrate this new technology best.

So if we looked at the chip stocks, we could see that it is not a coincidence that Taiwan semiconductor are benefitting. Meanwhile, artificial intelligence (AI) continues to fuel rapid growth in the component markets that power its applications. As companies compete to build more powerful AI platforms, the need for high-performance computing capabilities and memory solutions is poised to help push the meteoric boom in generative AI.  

In the next few years, generative AI is set to explode in value, eclipsing other AI solutions with a tremendous annual growth rate from which Taiwan is poised to benefit the most.  

Memory Market Troubles

The semiconductor market continues to shake as turbulence affects the DRAM and NAND flash sectors. Weakened consumer electronics sales, cautious enterprise spending, and lingering excess inventory continue to plague stabilization efforts in obtaining reasonable spot prices. Demand sluggishness persists across the memory sector, and new product lines only contribute to lingering surplus troubles.

So we might want to avoid the stocks that is dealing with DRAM and NAND flash sectors. Artificial intelligence has helped boost memory sales after the dramatic bullwhip from shortage to glut last year. While its aid has supported sales of high-bandwidth memory (HBM) and solid-state drives (SSDs), low demand across consumer electronics has kept complete recovery out of reach.  

In a recent report by TrendForce, DRAM spot prices are suffering from downward pressure, especially across DDR4 and DDR5, with the former seeing the most. TrendForce cites an underwhelming peak season as the primary reason for the unfavorable price conditions.  

One such stock is $Qualcomm(QCOM)$

Chips Up by 27% in 2Q24

In a recent report by SEMI, data reveals that the global semiconductor manufacturing industry continues to show signs of improvement. This can be seen in IC sales, as stabilized capital expenditures and installed wafer fab capacity increases have helped push the market toward recovery.  

In SEMI’s 2Q 2024 publication of the Semiconductor Manufacturing Monitor (SMM) Report, authored in collaboration with TechInsights, “seasonality and weaker than expected consumer demand impacted electronics sales in the first half of 2024, resulting in a 0.8% decrease year-over-year (YoY).”

SEMI writes, “Starting in 3Q 2024, electronics sales are forecast to see a rebound, growing by 4% YoY and 9% relative to 2Q 2024. IC sales showed robust 27% YoY growth in 2Q 2024 and are expected to surge by 29% in 3Q 2024, surpassing record levels seen in 2021.”

The surge in growth will be driven by AI, as most markets have seen over the last several months. Similarly, installed wafer capacity is projected to rise in 3Q 2024, with foundry and logic-related capacity witnessing more robust growth in Q2. Likewise, memory will continue to grow over the next quarter due to the strong demand for AI chips and the rapid adoption of HBM.

Technical Analysis - Nvidia (NVDA) - MTF

MACD has shown upside movement and NVDA is trading above both short-term and long-term MA.

MTF is showing a strong uptrend signal with Up trend on all time period. I am expecting NVDA to try to move towards the $130 level.

Technical Analysis - Taiwan Semiconductor (TSM) - MTF

We are seeing similar observation on TSM as TSM have been trading above the short-term and long-term MA.

MTF is showing a strong uptrend and MACD is also showing an uptrend movement, I will be monitoring this stock and planned to take a position.

Summary

I believe that the semiconductor sector is recovering with Nvidia coming back from its sleep and there should be more good news coming from this sector.

This should help to power up the chips maker, but we need to be aware of memory chips maker though.

Appreciate if you could share your thoughts in the comment section whether you think semiconductor sector is recovering.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.