Chip Stocks Rally as TSMC Earnings Point To Strong AI Demand [Video]

Chip stocks rose Thursday after the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co. (TSM), reinvigorated Wall Street’s AI enthusiasm with better-than-expected quarterly results and a rosy financial outlook. 

The PHLX Semiconductor Index (SOX) advanced about 2% on Thursday morning, led by TSMC, up 12%. Shares of Broadcom (AVGO) climbed more than 3%, while Nvidia (NVDA), the chip designer at the heart of the AI craze, rose 2%, as did chip designer Arm Holdings (ARM).

TSMC on Thursday morning said net income increased by more than 50% in the third quarter, far exceeding Wall Street’s estimates. CFO Wendell Huang attributed the company’s results to “strong smartphone and AI-related demand.” CEO C.C. Wei estimated that the contribution of AI processor sales to TSMC’s total revenue would triple this year.

The results underscored the diverging fortunes of companies within the broader semiconductor industry. Pockets of the industry are still grappling with an inventory …