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7 Tech Stocks Set to Skyrocket on Strong AI Chip Demand

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So much for a chip dip? Taiwan Semiconductor Company (NYSE:TSM), one of the world’s largest chip foundries, issued a strong outlook for 2024 Thursday, news that sent its shares surging 8%. Investors were excited by the fact that Taiwan Semi said it expected revenue to be up more than 20% this year.

The solid sales guidance from Taiwan Semi is a particularly good sign for the rest of the tech sector, especially customers that use its chips. That includes Apple (NASDAQ:AAPL), which is by far the biggest customer of TSMC, accounting for 23% of its total sales in 2022. Shares of Apple rose 3% Thursday. But it’s not the only big tech stock piggybacking off Taiwan Semi’s gains.

Taiwan Semi Lifts Chip Stocks with Strong Forecast

The entire chip sector got a boost Thursday, with the Philadelphia Semiconductor Index (SOX) rising more than 3%. Some of the biggest winners in the SOX were other top Taiwan Semi customers, such as Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD), Broadcom (NASDAQ:AVGO), Qualcomm (NASDAQ:QCOM) and Intel (NASDAQ:INTC).

These companies are all set to benefit from the continued explosive growth in demand for artificial intelligence chips. Nvidia and AMD are already leaders in this market and other semiconductor companies are ramping up their AI chip production as well. Taiwan Semi gave a clear indication Thursday that AI demand is booming and shows no signs of slowing down.

Taiwan Semi CEO C.C. Wei said during the earnings call that even though last year was a “challenging” one for the chip industry, “we also witnessed the rising emergence of generative AI-related applications with TSMC as a key enabler.” Wei added that AI chip demand is “robust” and that “almost all the AI innovators are working with TSMC.”

The Bottom Line

Sure, it may be tough for top chip stocks to do even better than they did in 2023. The SOX was up about 60% last year while Nvidia, AMD and Broadcom all topped that. But as the AI revolution marches on, the unbridled optimism from TSMC’s Wei about AI can’t be ignored.

What’s more, the fact that Samsung just launched an AI-enabled version of its Galaxy smartphone likely means that an AI iPhone isn’t likely to be too far behind. As long as Taiwan Semi keeps pumping out AI chips for Apple and semiconductor giants Nvidia, AMD, Intel, Broadcom, and Qualcomm, then TSM and these six other big tech stocks will likely all continue to ride the momentum of the AI wave.

As of this writing, Paul R. La Monica did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Paul R. La Monica is a veteran financial journalist with nearly 30 years experience (including more than 20 at CNN) covering the stock market and other asset classes, the economy and other corporate and business news.

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