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Chipmakers Surge on Optimism Fueled by AI Demand

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Shares of chipmakers saw significant gains on Monday, driven by optimism surrounding strong AI-driven demand. Microsoft’s plan to invest $80 billion in AI-enabled data centers in fiscal 2025 sparked expectations that semiconductor demand will remain robust. Micron (MU.O) led the charge with a 10.6% rise in its stock, while other key players like Applied Materials (AMAT.O), Lam Research (LRCX.O), and KLA Corp (KLAC.O) saw increases between 5.1% and 5.5%.

The Philadelphia Semiconductor Index (.SOX) surged 3.9%, reaching its highest point since mid-October, and has risen over 19% in 2024. The broader Nasdaq (.IXIC) also advanced, leading Wall Street’s major indexes higher, while semiconductor stocks in Europe and South Korea saw similar gains.

Citigroup noted that while Microsoft’s spending plan was in line with analysts’ expectations, it was seen as a “modest positive” for the sector, alleviating concerns about a potential drop in capital expenditure.

“AI data centers are very chip hungry, that’s why you have people running towards the chip sector right now,” said Michael Matousek, head trader at U.S. Global Investors.

The strong demand for AI servers, evidenced by Foxconn’s (2317.TW) record revenue for Q4, further fueled the sector’s positive momentum. Nvidia (NVDA.O), a key Foxconn customer, added 5.1%, with CEO Jensen Huang scheduled to deliver a keynote speech at the CES trade show later in the day. AI server manufacturer Super Micro Computer (SMCI.O) saw a 10.3% surge.

Although Nvidia’s quarterly results in November pointed to a slowdown in revenue growth, the surge in demand for the company’s AI chips, which dominate the market, has mitigated those concerns.

 

Vanguard Group Increases Talen Energy Stake to 10.4% Amid Growing AI Demand

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Vanguard Group has raised its stake in Talen Energy Corp to 10.4%, according to a filing made public on Wednesday. The asset management firm, which is now the second-largest shareholder of the independent power producer, purchased over 4 million shares of Talen Energy’s common stock. Prior to this acquisition, Vanguard held about 9.9% of Talen Energy’s outstanding shares as of October.

The increase in Vanguard’s stake comes at a time when demand for electricity has surged due to the growing investment in artificial intelligence (AI) by major tech companies. Data centers, which are central to AI operations, require significant power, and utilities like Talen Energy are seeing the benefits. Talen Energy’s stock price has tripled in 2024, and it continued to show slight gains in after-hours trading on Wednesday.

 

TSMC’s Q4 Revenue Exceeds Expectations, Boosted by AI Demand

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Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, reported a strong performance in the fourth quarter of 2024, with revenue significantly surpassing market forecasts, driven by robust demand for artificial intelligence (AI) products. TSMC’s customers, including major tech firms like Apple and Nvidia, have been key players in the AI revolution, which has helped offset the slowdown in chip demand for consumer electronics like tablets following the pandemic.

For the October-December period, TSMC posted revenue of T$868.42 billion ($26.36 billion), a 34.4% year-on-year increase, exceeding the expected T$853.57 billion ($25.90 billion) according to analysts surveyed by LSEG SmartEstimate. This marks a significant jump from the $19.62 billion revenue recorded during the same period in 2023.

TSMC had previously forecasted fourth-quarter revenue to fall between $26.1 billion and $26.9 billion, which it successfully met within its guidance range. For December alone, the company reported a 57.8% year-on-year revenue increase, reaching T$278.16 billion.

This positive performance reflects the growing demand for semiconductors used in AI applications, with other Taiwanese firms, such as Foxconn, also reporting strong earnings in the fourth quarter due to the AI boom. TSMC is scheduled to announce its full fourth-quarter earnings on January 16, where it will provide an updated outlook for the current quarter and the full year.

The company’s stock rose 81% in 2024, far outpacing the broader market’s 28.5% gain, though it closed flat on Friday ahead of the revenue release.