Shares of semiconductor giants Broadcom (NASDAQ: AVGO), Intel (NASDAQ: INTC), and Taiwan Semiconductor Manufacturing (NYSE: TSM) all marched higher Friday after Bank of America analyst Vivek Arya was quoted encouraging investors to invest in the "generational capex cycle in generative AI infrastructure."
Capex is shorthand for capital expenditures. Broadcom, TSMC, and Intel are chipmakers considered part of said "capex cycle," inasmuch as they produce the semiconductor chips that AI companies must buy if they want their artificial intelligence (AI) programs to function. As of 1 p.m. ET, Broadcom shares were up 2.5%, Intel had risen 3.5%, and Taiwan Semiconductor Manufacturing, also called TSMC, is doing best of all, with a 3.6% gain.
So that's the big picture backgrounding today's moves in semiconductor stocks generally. But why are these three stocks moving specifically? Well, in the case of Broadcom the answer is obvious: Alongside Nvidia, Arya named Broadcom as his top pick among AI stocks.
Intel and TSMC, on the other hand, have additional catalysts worth highlighting.
As Nvidia's go-to company for contract manufacturing of its chips, anything good for Nvidia is assumed to be good for TSMC as well. On top of that, TSMC got some especially good news last night when Bloomberg reported that the company's new advanced 4-nanometer chip manufacturing plant in Arizona is generating "yields" of 4% more usable chips than similar TSMC manufacturing plants back in Taiwan. This fact should translate directly to more revenue and higher profitability for TSMC, prompting a company spokesperson to call the number "highly satisfactory, with a very good yield."
TSMC furthermore promised to begin "volume production" at the plant in early 2025, which will allow the company to capitalize on these efficiency gains, and potentially improve TSMC's chances to benefit from U.S. government subsidies under the Chips Act.
Indeed. What about Intel?
I wish I could give better news on this front, but here's the real skinny: Beyond the broad enthusiasm for chips stocks generated by Arya's encouragement, Intel stock seems to be benefiting most today from an update on plans to expand chips production in Ohio. Specifically, the company's website states that "Intel is planning to invest more than $28 billion in the construction of two new leading-edge chip factories in Ohio to boost production to meet demand for advanced semiconductors."