Nvidia Stocks Rise on Optimism Surrounding AI Demand
Investing.com -- Stocks of leading semiconductor companies such as Nvidia (NASDAQ:NVDA), AMD (NASDAQ:AMD), Micron (NASDAQ:MU), and Broadcom (NASDAQ:AVGO) rose in pre-market trading on Monday in response to positive revenue growth news announced by Nvidia's server assembly partner, Hon Hai Precision Industry Co. (also known as Foxconn).
At the same time, Foxconn, the world's largest producer of Apple Inc.'s iPhones, reported a 15% revenue increase, exceeding expectations due to ongoing demand for artificial intelligence infrastructure. The company's revenue for December rose by 42%, contributing to a total of 2.13 trillion NT$ (64.6 billion $) for the quarter. This strong performance led to a 3.6% increase in Foxconn's shares in Taipei, marking one of the most significant intraday gains in nearly two weeks.
The positive results from Foxconn provided support for semiconductor stocks; Nvidia rose by 2.6%, AMD by 3%, Micron by 5.8%, and Broadcom by 1.1%. Demand for artificial intelligence infrastructure, bolstered by significant investments in data center servers from major U.S. tech companies like Alphabet Inc. and Microsoft Corp., has been a boon for Taiwan's AI hardware suppliers, including Foxconn.
Despite the positive momentum, there is a sense of caution among investors regarding the sustainability of the expansion. Nevertheless, Foxconn's forecast for "significant" sales growth in the first quarter has contributed to the optimistic sentiment in the semiconductor sector.
The performance of the semiconductor industry is closely watched as a leading indicator for the broader tech sector and a key indicator of global economic health. Recent gains in semiconductor stocks suggest that investors are focusing on the potential of AI and data center growth to drive demand, despite underlying concerns about the market's future trajectory.
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