To The Moon

This is an excerpt from MarketWatch :

If there was any concern about the health of the artificial-intelligence chip market currently, Taiwan Semiconductor Manufacturing Co. (TSMC) put that to rest with its latest results.

That sparked a rally in some AI stocks on Thursday, though Nvidia shares $(NVDA)$ pared gains and failed to notch a new record close, despite having been on track for one earlier in the day. The stock's current closing high is $138.07, hit on Monday, but Nvidia ended at $136.93 on Thursday.

Shares did touch as high as $140.89 on Thursday for their first new intraday high since June, according to Dow Jones Market Data.

Shares of Advanced Micro Devices Inc. $(AMD)$ gave back most of its gains as well, ending the day essentially flat. AMD's stock is more shorted than Broadcom Inc.'s $(AVGO)$, Mizuho desk-based analyst Jordan Klein noted.

Broadcom's stock rose 2.7% and Micron Technology Inc.'s $(MU)$ ended up 2.6%, with both of those names coming off their intraday highs as well.

While TSMC issued upbeat commentary on the state of the AI market, Wall Street perhaps already had that confidence.

"We continue to observe extremely robust AI-related demand from our customers throughout the second half of 2024," TSMC $(TSM)$ Chief Executive C.C. Wei said on the company's earnings call, according to a transcript provided by AlphaSense. TSMC, which makes chips for many companies in the industry, now anticipates that its revenue contribution from AI server processors will more than triple in 2024 to make up a mid-teens portion of overall revenue for the year.

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TSMC's report overnight "confirms our view that there is no slowdown to the AI growth story, which should drive continued outperformance" for shares of Nvidia, Broadcom, AMD, Micron and Marvell Technology Inc. $(MRVL)$, wrote Cantor Fitzgerald analyst C.J. Muse.

ASML Holding earlier in the week specifically called out AI as an area of strength despite more sluggish trends elsewhere, but that didn't stop shares of Nvidia and the like from dropping at the time. Nvidia, though, is especially less swayed by more general chip-market trends thanks to its booming AI data-center chip business.

TSMC's results offered a more upbeat read on trends outside of AI than ASML's did, with Muse noting that "everything outside of AI has stabilized and has begun showing signs of improvement." That said, he added, "it is worth noting that TSMC's moat as the sole provider of leading-edge logic chips somewhat insulates them from market softness."