Artificial intelligence (AI) chip stocks led by Nvidia Corp and Advanced Micro Devices, Inc. (AMD) are trading higher on Wednesday. This uptick follows Taiwan Semiconductor Manufacturing Co.’s (TSMC) report of significant revenue growth in June.
The preliminary second-quarter revenue for TSMC grew by 32% year-over-year, showcasing the persistent demand driven by the AI sector. Analysts have labeled Nvidia as the primary beneficiary of the ongoing AI boom, with AMD also reaping significant rewards. In addition to the strong market performance, AMD received a boost from its acquisition of Silo AI, a leading AI lab based in Europe.
This all-cash transaction is worth $665 million. Helsinki-based Silo AI operates in both Europe and North America, providing comprehensive AI-driven solutions that integrate smoothly into various products, services, and operations. The AI lab is known for developing advanced open-source multilingual large language models (LLMs), such as Poro and Viking, on AMD platforms and offers its SiloGen model platform.
As of March 30, 2024, AMD held $6.04 billion in cash and equivalents. Peter Sarlin, CEO and co-founder of Silo AI, will continue to lead the company as part of the AMD AI Group. The acquisition is expected to close in the second half of 2024.
Over the past 12 months, Nvidia stock has surged by over 217%, while AMD stock has risen by 63%. Investors looking to gain exposure to Nvidia can do so through the Vanguard S&P 500 ETF or the Invesco QQQ Trust, Series 1.
Nvidia and AMD stocks surge
Semiconductor stocks were mostly higher on Wednesday as the sector continued to benefit from the artificial intelligence spending boom. Startups are also riding the AI wave, with Nvidia competitor Groq, which specializes in chips designed for large language models, nearing a $300 million fundraising round at a $2.2 billion valuation. Other AI-focused semiconductor stocks saw gains as well.
Broadcom is slated to split its stock 10-1 on July 15. Micron and Qualcomm were among the other notable gainers. Semiconductor equipment maker MKS Instruments rose following an upgrade to a Buy rating from Bank of America, with a price target of $160.
This positively affected suppliers such as Applied Materials, Lam Research, and KLA Corp., all of which saw midday trading gains on Wednesday. Other semiconductor stocks like On Semiconductor, NXP Semiconductors, Texas Instruments, and Analog Devices also reported solid gains, reinforcing the broad strength in the sector spurred by the ongoing AI investment boom. In a move that underscores the sector’s robustness, chip stocks are heading for their sixth consecutive day of gains, nearing record levels.
This surge comes amid anticipation of upcoming earnings reports and economic data which investors hope will shed light on the broader economic outlook. The market’s recent performance has been notably strong, with both the S&P 500 and Nasdaq closing at new record highs. Investors are closely monitoring Federal Reserve Chair Jerome Powell’s testimony before Congress, as well as key inflation data expected to be released soon.
The semiconductor industry, a vital component of the tech-heavy Nasdaq, has been buoyed by strong demand and optimism surrounding technological advancements. Analysts suggest that these factors will continue to drive the sector forward, potentially leading to more record-setting performances in the coming weeks. Overall, the market’s enthusiasm reflects a broader confidence in the economic recovery and the pivotal role of technology in driving future growth.
