Nvidia rebounds after TSMC says AI chip demand remains strong

🌈 Abstract

The article discusses the performance of Nvidia's stock and the semiconductor industry, particularly in relation to the geopolitical tensions surrounding Taiwan and the upcoming U.S. presidential election.

🙋 Q&A

[01] Nvidia Stock Performance

1. What happened to Nvidia's stock on Thursday?

• Nvidia's stock rose about 3% during trading on Thursday, rebounding from a 7% plunge the previous day.

2. What was the reason for Nvidia's stock rebound?

• The rebound was due to TSMC (Taiwan Semiconductor Manufacturing Company) stating that demand remains high and supply remains constrained for high-end AI chips, which TSMC manufactures for Nvidia.

[02] Semiconductor Industry Performance

1. How did the semiconductor sector perform on Wednesday?

• The semiconductor sector had its worst day since 2020, with big drops from AMD, Arm, Broadcom, and Qualcomm alongside Nvidia.

2. What was the reason for the semiconductor sector's poor performance?

• The semiconductor sector sunk on geopolitical concerns highlighted by comments from U.S. presidential candidate Donald Trump, who suggested he was considering a change to U.S. policy to not protect Taiwan from a Chinese invasion without payment.

3. How did other chipmakers perform?

• Arm was down 2%, AMD fell 2%, and Qualcomm was flat. Super Micro Computer, a key server assembler for Nvidia, fell 2%.
• Intel rose over 1%, and Broadcom was up about 3% after a report that it was in talks to produce AI chips for OpenAI.
• ASML, a Dutch company that makes the machines TSMC uses to make chips, was off 1% after it reported light sales guidance for the current quarter.

[03] TSMC's Outlook

1. What did TSMC's chairman say about the supply and demand for high-end AI chips?

• TSMC Chairman C.C. Wei said that the supply continues to be pretty tight, all the way through 2025, and that he cannot reach the supply and demand balance due to the high demand.

2. How is TSMC responding to the supply and demand challenges?

• TSMC is currently constructing a large chip factory in Arizona, partially funded by U.S. subsidies, to mitigate the risks of geopolitical tension.

[04] Investor Sentiment

1. How are investors responding to the semiconductor sector's performance?

• According to UBS analysts, investors are taking gains from strong semiconductor performers and reallocating them into other shares, although forthcoming commentary later this year on how companies are making a return on investment on AI chips may spur the sector higher again.

2. How has Nvidia's stock performed so far in 2024?

• Nvidia stock is up more than 150% so far in 2024.