TSMC's Trillion-Dollar Milestone Highlights AI Revolution on Wall Street
Taiwan Semiconductor Manufacturing Company (TSMC) has achieved a significant milestone by entering the elite club of the world's most valuable companies, underscoring the transformative impact of the generative AI revolution on Wall Street.
Listed on both Taiwan and New York stock exchanges, TSMC briefly surpassed the trillion-dollar market capitalization mark on Monday, surpassing Tesla to become the seventh most valuable technology giant globally.
Monday also saw record highs for Alphabet, Apple, and Meta, reinforcing the dominance of tech giants in global markets. Microsoft and Apple lead the pack, with AI chip designer Nvidia closely following.
"The semiconductor industry now leads the S&P 500," noted CFRA analyst Angelo Zino, highlighting the sector's rapid ascent in recent months amid skyrocketing demand driven by generative AI technologies.
Governments are also bolstering chip-makers with substantial subsidies. The Biden administration, for instance, has allocated tens of billions of dollars to support chip factory development in the United States, aiming to bolster domestic semiconductor production.
Global semiconductor sales, encompassing integrated circuits, microprocessors, and memory chips, are projected to hit a record $611.2 billion in 2024, with anticipated annual growth of 16% in 2024 and 12.5% in 2025, according to the Semiconductor Industry Association.
Nvidia, renowned for its graphics processing units (GPUs), has been a standout performer on Wall Street. Since the launch of ChatGPT in November 2022, Nvidia's market capitalization has surged eightfold, briefly making it the world's most valuable publicly traded company in mid-June 2024, surpassing Microsoft with a valuation of $3.3 trillion.
"Nvidia's GPUs are now essential components for generative AI, akin to gold or oil in the tech sector," noted analysts at Wedbush Securities, pointing to Nvidia, Apple, and Microsoft vying for a trillion-dollar market valuation.
With most of its manufacturing operations based in Taiwan, TSMC is strategically positioned to capitalize on the industry's growth. While Nvidia designs chips, it relies heavily on TSMC for manufacturing, reinforcing the Taiwanese giant's pivotal role in the global semiconductor supply chain.
Earlier this year, TSMC reported robust first-quarter sales of $18.87 billion, up 13% year-on-year, with net income climbing 9% to $6.97 billion. Nvidia also posted impressive quarterly results, with sales reaching $26 billion and quarterly profit soaring to $14.9 billion, a sevenfold increase over the previous year.
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