Nvidia shares powered higher in early Thursday trading, putting the stock at a fresh all-time high, following a blowout set of third quarter earnings from the chipmaker at the epicenter of its supply chain.
Nvidia (NVDA) , which sits just below Apple AAPL as the world's second-most valuable company by market cap, has been riding a massive AI demand wave for much of the past 18 months as the world's biggest tech companies scramble to invest billions in the hot new technology.
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That's put tremendous pressure on the broader semiconductor supply chain and the production capacity of Taiwan Semiconductor (TSM) , the world's largest contract chip maker, as demand accelerates and the market remains dominated by only a handful of chipmakers and designers.
Group CEO C.C. Wei told investors that the AI-demand story is "real and just the beginning," adding that overall activity outside the AI investment race is "stabilized and starting to improve.”
Analyst Ives: 'Monster' numbers from TSMC
TSMC posted a record quarterly profit of the equivalent of US$10.06 billion and forecast a full-year revenue growth rate of around 30%. It also pegged its overall capital spending plans at just over $30 billion for this year and higher still in 2025.
"Our customer's demand far exceeds our ability to supply," Wei said.
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Wedbush analyst Dan Ives said the "monster" numbers from TSMC were a "very important data point for [the] AI Revolution thesis and growth looking ahead.
"As we said ASML is background noise," he added, referring to the European chip-equipment maker's muted 2025 sales forecast from yesterday. "TSMC is what matters for tech and AI trade."
Here's all you need to know about today and tech. From the Taiwan Semi conference call a few minutes ago: "Our customer's demand far exceeds our ability to supply." That customer is Nvidia $NVDA
— Jim Cramer (@jimcramer) October 17, 2024
Data from market research group IDC suggests generative AI spending could top $150 billion by 2027, implying a compounded annual growth rate of around 86% from 2023 levels.
Total AI spending, meanwhile, which includes software, hardware and services, is likely to more than to around $632 billion by 2028 double from $235 billion last year, according to IDC estimates.
Advanced Micro Devices (AMD) , meanwhile, told investors last week that the market for AI accelerators, the chips that power large-language models used by hyperscalers such as Microsoft (MSFT) , Alphabet (GOOGL) and Meta Platforms (META) , could reach $500 billion within three years, a 25% increase from its prior forecast.
The hyperscalers are the major providers of cloud services and infrastructure.
Related: Goldman Sachs analyst updates Nvidia stock price target as AI grip tightens
All this puts Nvidia and its tightening grip on the market for the chips and processors that power AI applications in sharp focus for investors heading into the start of the tech-earnings season.
Nvidia told investors in late August that it saw current-quarter revenue in the region of $32.5 billion, more than double the tally from the year-earlier period, even as it faced some delays in shipping its new line of Blackwell processors amid design changes and supply-chain snarls.
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Finance chief Colette Kress said Blackwell should generate "several billion" in revenue for Nvidia's fiscal fourth quarter, which ends in January, adding that legacy Hopper sales would accelerate over the year's second half.
Nvidia shares were marked 3.77% higher in early Thursday trading, changing hands at $140.57 each after hitting a fresh all-time high of $140.80 earlier in the session.
TSMC shares, meanwhile, surged 11.5% to $209.03 each, extending their 2024 gain past 105%.
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