Chip stocks pop after TSMC's earnings beat boosts confidence in industrywide demand

In a remarkable display of confidence in the semiconductor industry, shares of major chip manufacturers surged on Thursday following Taiwan Semiconductor Manufacturing Company's (TSMC) impressive earnings report. Nvidia and Advanced Micro Devices (AMD) took the lead in this upward momentum, with Nvidia's stock climbing nearly 3% in early afternoon trading. AMD also experienced a significant gain, rising by 6%. Broadcom, known for its custom chips tailored for artificial intelligence applications, saw its shares increase by approximately 2%. TSMC, the leading contract chipmaker globally, announced a 35% rise in its fourth-quarter profits, surpassing analysts' expectations. The company further indicated plans to ramp up capital expenditures in 2026, underscoring its confidence in the ongoing expansion of AI technologies. Wendell Huang, TSMC's finance chief, expressed optimism during the earnings call, stating, "We expect our business to be supported by continued strong demand for our leading-edge process technologies." This positive outlook contributed to a remarkable increase of over 6% in TSMC's stock price. This boost in chip stocks comes just ahead of the U.S. tech earnings season, which is set to begin next week with Intel, a company grappling with challenges. Following that, industry giants like Apple, Tesla, Meta, and Microsoft are scheduled to release their earnings reports. The VanEck Semiconductor exchange-traded fund, which features Nvidia, TSMC, and Broadcom among its top holdings, rose by 3.5% on Thursday. Additionally, memory storage manufacturer Micron, ranked fourth in the sector, climbed by more than 3%. Other key players also saw gains, with Lam Research, a chip equipment manufacturer, jumping by 6.5%, and Analog Devices increasing by nearly 2%. The anticipation surrounding these earnings reports reflects a broader optimism in the semiconductor market, particularly as demand for AI capabilities continues to drive growth.