Artificial intelligence (AI) pioneer Nvidia delivered an outstanding quarterly report that crushed Wall Street’s expectations, sending shares of the chipmaker soaring as it became clear that AI is going to remain a big growth driver for the company. However, Nvidia wasn’t the only semiconductor stock that benefited from its impressive showing.
Shares of Advanced Micro Devices (NASDAQ: AMD) and Taiwan Semiconductor Manufacturing (NYSE: TSM), popularly known as TSMC, also enjoyed a bounce following Nvidia’s report. Let’s see why that was the case and check why it could be worth buying these two names right away.
1. Taiwan Semiconductor Manufacturing
TSMC stock jumped more than 3% after Nvidia released its earnings. That wasn’t surprising since Nvidia relies on TSMC’s foundries to churn out its AI chips. Nvidia is a fabless semiconductor company, which means that it only designs chips; the manufacturing is done by foundries such as TSMC.
Nvidia is gradually becoming one of TSMC’s top customers. Though TSMC doesn’t reveal details of its business with individual customers, Nvidia reportedly produced 11% of its top line last year, according to financial analyst Dan Nystedt (via Tom’s Hardware). There is a good chance that Nvidia is set to contribute more significantly to TSMC’s top line for a few simple reasons.
Nvidia management pointed out on the company’s latest earnings conference call that it has brought its next-generation Blackwell chips into full production already. The company will continue to ramp up the production of its new chips in the fiscal third quarter. According to third-party estimates, Nvidia could ship 420,000 units of its GB200 Blackwell Superchip, which contains two of the company’s latest generation B200 AI graphics processing units (GPUs).
Even better, Nvidia is expected to ship between 1.5 million and 2 million GB200 Superchips next year, which should pave the way for terrific growth at TSMC. The initial production ramp-up of Nvidia’s new chips seems to be driving solid growth for TSMC already, as its revenue for April shot up nearly 60% year…
..
