The Kingmaker Behind Nvidia's AI Throne Is Ready To Rule – Investor's Business Daily
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As artificial intelligence seeps into an ever-expanding range of industries, Nvidia (NVDA) gets hailed as the king of AI. But Taiwan Semiconductor Manufacturing (TSM), also known as TSMC, stands as the leading power behind that throne. And now both Nvidia and Taiwan Semi have etched new buy points to try and extend their rule.
On Friday, TSM stock — featured as the latest IBD Stock Of The Day — gapped up into buy range from a 148.43 buy point.
In addition to Nvidia, TSMC works with most of the largest chip designers. Its partners include Advanced Micro Devices (AMD), Arm Holdings (ARM), Broadcom (AVGO), Apple (AAPL), Marvell Technology (MRVL) and Qualcomm (QCOM).
Founded in 1987, TSMC created the foundry business model for the semiconductor industry, consisting of semiconductor fabrication plants and integrated circuit design operations.
Today, it operates across four major markets: smartphones, high-performance computing, automotive electronics and the Internet of Things, or IoT.
In March, TSMC and systems design solutions leader Synopsys (SNPS) announced their move into production with Nvidia’s computational lithography platform.
In the news release, Nvidia said the collaboration among the three firms will push the limits of physics for the next generation of advanced semiconductor chips.
Noting that computational lithography is a cornerstone of chip manufacturing, Jensen Huang, founder and CEO of Nvidia, said that his firm’s partnership with TSMC and Synopsys “applies accelerated computing and generative AI to open new frontiers for semiconductor scaling.”
Last month, TSMC unveiled more innovations at the 2024 North America Technology Symposium. The company announced its newest semiconductor process, advanced packaging, and other technologies for powering the next generation of AI innovations.
“We are entering an AI-empowered world, where artificial intelligence not only runs in data centers, but PCs, mobile devices, automobiles and even the Internet of Things,” said CEO C.C. Wei.
In April, TSMC also announced plans to build a third leading-edge fab in Arizona.
The company continues to work on completing its first fab as it builds a second one at its Arizona subsidiary. The third fab brings TSMC’s total capital expenditure for the Phoenix, Ariz., site to more than $65 billion. That makes it the largest foreign direct investments in a greenfield project in U.S. history. (A greenfield project is one made from scratch, with no infrastructure or systems in place.)
Nvidia has formed a pattern with a 974 buy point. With earnings due May 22, the stock popped above its 50-day moving average earlier this month and remains above it. Nvidia closed the week 8% shy of a breakout.
Taiwan Semiconductor stock has crafted a double bottom, a common chart pattern in choppy markets. Like Nvidia, TSMC stands above its 50-day line. On Friday, the semiconductor giant rose over 4%, lifting it past a 148.43 buy point in heavy volume.
TSMC retook the 50-day line not long after reporting a Q1 earnings beat on April 18. After a string of quarters showing slowing growth, TSMC posted an 11% sales gain to $18.5 billion and a 4% earnings increase to $1.36 a share.
Analysts see that growth continuing, with forecasts for a 16% jump to $6.12 per share in 2024. For next year, Wall Street expects a 25% gain to $7.63 a share.
Follow Matthew Galgani on X, formerly Twitter, at @IBD_MGalgani.
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