US semiconductor index jumps as TSMC signals strong AI chip demand

Taiwan Semiconductor Manufacturing Company’s (TSMC) logo is seen while people attend the opening of the TSMC global R&D center in Hsinchu, Taiwan July 28, 2023. REUTERS/Ann Wang/File photo

NEW YORK  – An index of semiconductor stocks was up more than 2 percent on Thursday and chip stocks were helping the broader market after Taiwan Semiconductor Manufacturing cited strong demand for high-end chips used in artificial intelligence (AI).

U.S.-listed shares of the world’s largest contract semiconductor maker, which also forecast more than 20 percent growth in 2024 revenue, were last up 7.2 percent, the biggest percentage gainer for the day on the semiconductor index. The S&P 500 was up 0.3 percent.

The semiconductor index rose 65 percent in 2023 and hit an all-time intraday high on Dec. 28 of 4,233.73, boosting the overall market amid optimism over AI demand.

READ: S&P 500 ends near record high as AI optimism lifts chipmakers

“With basic semiconductors – that’s a supply and demand business… but I think you’re going to continue to hear chatter about AI, and it will translate into huge revenue growth for a lot of these companies,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

“To me, we’re in the early stages still of a technological revolution.”

On Jan. 8, shares of the world’s most valuable chipmaker, Nvidia, surged to a then record close after it unveiled new desktop graphics processors taking advantage of AI. Nvidia is viewed as the leading supplier of processors used in AI computing.

READ: Nvidia briefly joins $1T valuation club

Nvidia’s shares were last up about 1 percent after hitting a fresh record peak on the session. The stock is up about 14 percent to start the year after having more than tripled in 2023.