Blog

Nvidia Approaches Record High as TSMC Reports Surge in Sales: Insights into AI Chip Demand and Future Growth

Mike Cianciabella | October 10, 2024

Responsive image

Nvidia Nears Record High: What TSMC’s Sales Mean

Nvidia’s stock performance has been a focal point for investors and industry observers alike, as the share price recently closed just shy of its record high. In a trading session on Wednesday, Nvidia shares fluctuated but ultimately ended the day at $132.65, marking a 0.2% decline after a significant 4.1% increase the previous day. This puts Nvidia perilously close to its all-time closing high of approximately $135, achieved in June, adjusted for stock splits.

Key Developments from TSMC

A major catalyst for this recent stock activity was the sales report from Taiwan Semiconductor Manufacturing Company (TSMC), Nvidia’s vital supplier. TSMC announced a remarkable 40% increase in sales for September compared to the same month last year, with total third-quarter sales hitting 759.69 billion New Taiwan dollars, or approximately $23.58 billion. While TSMC has not provided extensive commentary alongside these figures, the company had previously guided expectations for third-quarter revenue in the range of $22.4 billion to $23.2 billion.

Demand for AI Chips

Both Nvidia and TSMC face challenges in meeting the soaring demand for AI chips, an essential component in various technologies driving forward the AI revolution. TSMC has confirmed plans to double its advanced chip-packaging capacity, known as CoWoS (Chip-on-Wafer-on-Substrate), by the end of 2024. This packaging technology is crucial for the production of Nvidia’s most advanced AI chips. The market appears optimistic as investors shift focus from potential delays involving Nvidia’s upcoming Blackwell artificial intelligence chips to the larger issue of sustained investment in AI technologies.

Future Projections

Looking ahead, Nvidia’s financial prospects are exceptionally buoyant. Analysts from J.P. Morgan project that Nvidia is on track to generate approximately $175 billion in revenue next year, with forecasts indicating a rise to $225 billion by 2027. These estimates account for an extensive array of factors, including research and development (R&D) and operational expenses. The total spending on AI could soar to as high as $1 trillion when evaluating the complete tech hardware supply chain.

Investors’ Sentiment

The current enthusiasm surrounding Nvidia is primarily attributed to the company’s dominant position in the AI sector. With major investments directed toward AI technologies and innovations, Nvidia stands to benefit handsomely from this expanding market. The positive movement in shares can also be seen as a reflection of the broader industry’s inclination toward advanced chip manufacturing and deployment.

Conclusion

Nvidia’s close approach to its record high mirrors the growing confidence in the AI sector and the critical role played by TSMC in supporting this technological evolution. As both companies ramp up efforts to meet market demand, investors are increasingly optimistic about the future. The combination of robust sales from TSMC and Nvidia’s burgeoning revenue expectations forms a strong foundation for potential future growth, emphasizing the symbiotic relationship between chip manufacturers and AI developers.

As the technological landscape continues to evolve, one thing remains clear: Nvidia is well positioned to capitalize on the artificial intelligence boom, and investor interest is only likely to grow more intense in the months ahead.