U.S. stocks closed sharply higher on Thursday, with the S&P 500 near a record high, as optimism about artificial intelligence drove gains for Nvidia and other chipmakers.

Earlier on Thursday, TSMC (TSM.N) issued a better-than-expected first-quarter outlook while offering upbeat comments on the future of artificial intelligence chips. TSMC (TSM.N), the world's largest contract semiconductor maker, expects revenue growth of more than 20% in 2024 due to strong demand for high-end chips used in artificial intelligence applications.

TSMC surged nearly 10% on the day, also boosting other chip stocks, with Advanced Micro Devices (AMD.O) up 1.6% and Nvidia up nearly 2%, hitting a record high and becoming the most traded company on Wall Street.

In addition, Advanced Micro Devices (SMCI.O) also sent out the latest optimistic signal for the chip industry on Thursday.

The company, which is a partner of Nvidia Corp (NVDA.O) and provides servers that run artificial intelligence chips, is expected to report second-quarter results that are significantly better than market expectations.

The company expects net sales of between $3.6 billion and $3.65 billion, above the market's consensus forecast of $2.8 billion, which is also the median outlook given by AMD.

AMD also now expects adjusted earnings per share of $5.40 to $5.55 for the December quarter, while analysts had expected $4.51.

The company's statement was brief, noting that "there is strong market and customer demand for rack scale, artificial intelligence and overall IT solutions" and that it would hold an earnings call after the market close on January 29.

Super Micro Computer (SMCI.O) shares rose more than 11% in after-hours trading.

Broadcom, Qualcomm and Marvell Technology all rose more than 3%. The Philadelphia Semiconductor Index rose 3.4%, approaching its all-time high in December 2023. Jake Dollarhide, CEO of Longbow Asset Management, said:

“There’s been a backlash in the industry because of AI, and I don’t think it’s going to stop anytime soon.”

Article forwarded from: Jinshi Data