Chip stocks experienced a surge on Monday following Foxconn's impressive earnings report, indicating robust demand for artificial intelligence servers. The tech manufacturer disclosed a record-breaking revenue of $64.75 billion for the fourth quarter, reflecting a 15% increase from the previous year. This notable performance translated into gains for industry players such as Nvidia, AMD, Micron, Taiwan Semiconductor Manufacturing, and ASML.
Nvidia Leads the Charge
Nvidia emerged as a frontrunner in the market rally, with a 5% increase on Monday. Other US chip stocks, including Advanced Micro Devices and Micron Technology, also saw positive growth of 4% and 12%, respectively. Additionally, Broadcom and Qualcomm witnessed a rise of about 3% during the trading day.
Global Chip Stocks Benefit
International chip stocks like Taiwan Semiconductor Manufacturing, a prominent contract chip manufacturer, saw a notable uptick of 5%. ASML, a leading chipmaking machinery producer, also experienced an 8% gain in its stock value, further fueling the industry's positive momentum.
Foxconn's Strong Performance
Foxconn's robust quarterly earnings were primarily attributed to its cloud and networking segments, showcasing strong demand for AI servers. The company reported revenue of 2.132 trillion New Taiwan dollars, equivalent to $64.75 billion, for the fourth quarter of 2024, surpassing analyst estimates and marking a significant year-over-year revenue growth of 15%.
Positive Outlook for Chip Demand
The optimistic outlook for chip demand was further reinforced by Foxconn's forward guidance, anticipating "significant growth" in sales for the upcoming quarter. This positive sentiment aligns with analysts' expectations of sustained strong demand for AI chips, underlining the industry's enduring influence over the market.
Market Catalysts
Nvidia's stock received an additional boost as CEO Jensen Huang prepared to deliver a keynote address at the Consumer Electronics Show, historically driving positive market reactions. Microsoft's recent announcement of an $80 billion investment in AI data centers also contributed to the sector's favorable momentum.
As chip stocks continue to lead the market rally, with Nvidia alone witnessing a remarkable 171% surge in the past year, investors remain cautious about the returns on AI investments. Despite some concerns, the industry's resilience and Foxconn's optimistic performance signal a promising trajectory for chip manufacturers in the evolving market landscape.
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By: kcloonan@insider.com (Kelly Cloonan)
Title: Chip Stocks Surge After Foxconn’s Earnings Beat Signals Strong AI Server Demand
Sourced From: markets.businessinsider.com/news/stocks/nvidia-chip-stocks-ai-demand-foxconn-earnings-semiconductors-2025-1
Published Date: Mon, 06 Jan 2025 18:46:42 +0000
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