U.S. Chip Stocks Rally As TSMC's AI-Backed Outlook Impresses

US chip stocks rose before the bell on Thursday after industry bellwether TSMC's strong sales forecast boosted investor optimism about demand for processors used in artificial intelligence (AI) applications, Arsheeya Bajwa reported for Reuters.

US-listed TSMC shares rose 7%, with the company's market capitalization poised to surpass $1 trillion if premarket gains hold. I Photo: Greater Phoenix Economic Council

Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, raised its expectation for annual revenue growth and said sales from AI chips would account for a mid-teen percentage of its full-year revenue.

The forecast from the leading producer of advanced AI chips reinforced investor confidence in the outlook for chipmakers, whose market values have soared over the past two years due to a surge in chip spending by Big Tech.

US-listed TSMC shares rose 7%, with the company's market capitalization poised to surpass $1 trillion if premarket gains hold.

TSMC customer and AI chip leader Nvidia and smaller competitor AMD both gained more than 2%. Networking chipmaker Broadcom, smartphone semiconductor maker Qualcomm, and memory chip provider Micron rose between 1.5% and 3%.