Dutch company ASML and Taiwanese TSMCShares of two of the world’s most important semiconductor companies rose Thursday Nvidia’s The earnings have impressed investors.
Nvidia beat market expectations on earnings and revenue on Wednesday. But its second-quarter sales forecast of about $11 billion — more than 50 percent higher than Wall Street estimates — sent shares of the U.S. giant surging more than 24 percent in after-hours trading.
The forecast comes amid a surge in demand for its AI-related chips.
Nvidia designs and sells graphics processing unit (GPU) chips that are used in data centers and continue to power AI applications. Interest in AI has exploded in recent months, arguably due to the virality of OpenAI’s ChatGPT.
Gains in Nvidia stock sparked a rally in global chip stocks.
Two of the most notable of these are ASML and TSMC. Netherlands-based ASML rose more than 5% in early European trade on Thursday. Taiwan-listed TSMC closed up more than 3 percent.
The backlash can be explained by a simple fact: Nvidia doesn’t make its own chips. Instead, it relies on TSMC, the world’s most advanced chipmaker, to manufacture its GPUs. TSMC relies on ASML for the machines necessary to manufacture the world’s most advanced semiconductors.
Nvidia’s upbeat forecast for the second quarter has boosted expectations that it will increase orders from companies such as TSMC, which in turn relies on ASML for equipment.
“We’re procuring significantly more supply for the second half of the year,” Nvidia Chief Financial Officer Colette Kress said on Wednesday’s earnings call.
Rising stock prices across the industry underscore the concentration of the semiconductor supply chain.
Nvidia is arguably the leader when it comes to designing AI chips, but it relies on TSMC — the world’s largest and most advanced contract chipmaker. TSMC makes chips for a number of companies, including Apple.
Meanwhile, ASML is the only company in the world that can manufacture and sell a $200 million extreme ultraviolet (EUV) lithography machine. This tool is necessary to make cutting-edge chips, and Nvidia’s high-end GPUs require similar tools.
