Why TSMC Stock Is Jumping Today – The Motley Fool
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Bullish macroeconomic data and AI momentum are boosting the semiconductor leader's valuation.
Taiwan Semiconductor Manufacturing (TSM -0.81%) stock is making big gains in Wednesday’s trading. The chip fabrication leader’s share price was up 4.8% as of 2: 15 p.m. ET, according to data from S&P Global Market Intelligence.
While there wasn’t much in the way of business-specific news pushing the company’s share price higher, TSMC stock benefited from some favorable economic data and an ongoing rally for artificial intelligence (AI) stocks. Consumer Price Index (CPI) data released by the U.S. Bureau of Labor Statistics showed that inflation had come in slightly lower than anticipated in May, and the report is helping to spur continued gains for growth-dependent tech stocks.
Growth investors got some good news with the new CPI data released today. The CPI, which tracks the pricing change of a combined group of goods, showed that costs increased 3.3% year over year in May and were flat on a sequential monthly basis.
While that may not be much solace to shoppers who continue to feel the squeeze of inflationary pressures, the increase came in lower than most economists expected. Inflation was broadly anticipated to increase 3.4% year over year and rise 0.1% sequentially.
On the heels of better-than-expected CPI data, investors turned more bullish on growth stocks. In particular, the news helped trigger big gains for Nvidia stock. Gains for Nvidia have frequently triggered strong performance for other big names in the AI space, and the combination of bullish catalysts is helping to power gains for TSMC.
TSMC remains the leading manufacturer of high-performance semiconductor stocks used to power artificial intelligence, data centers, and accelerated computing applications. For investors looking for ways to benefit from the rise of AI, the stock continues to look like a worthwhile long-term buy.
On the other hand, there’s one very important risk factor that should be kept in mind. Many geopolitical analysts think that there’s a strong chance that China will move to exert more control over Taiwan within the next five years. Gaining greater control over TSMC and its advanced chip fabrication capabilities could be a core motivator for such a move, and that could spell trouble for investors.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
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