The semiconductor index rose nearly 4%, NVIDIA and Taiwan Semiconductor are expected to close at new highs! What happened to the chip stocks?
NVIDIA has broken through $150 for the first time since last November, with semiconductor stocks in Asia, Europe, and the United States rising broadly. The demand for AI has stimulated Foxconn's revenue to reach a record high in the fourth quarter of last year, becoming the main reason driving chip stocks to lead the market. At the same time, Microsoft and OpenAI have successively released positive signals regarding AI demand, and the market is also looking forward to Jensen Huang's significant speech on Monday, all of which have boosted sentiment
On Monday, January 6, chip stocks drove a significant rise in U.S. stocks. In the first two hours of trading, the Nasdaq rose nearly 2%, the S&P 500 index increased by 1.3%, and the Philadelphia Semiconductor Index surged nearly 4%, reaching its highest level in five and a half months since July 23 of last year.
Among key stocks, the "AI darling" NVIDIA rose over 5%, with its stock price surpassing $150 for the first time since November 2024, approaching the intraday high of $152.89 set on November 21, and is expected to reach a historical closing high, with all three trading days in the new year showing gains.
Semiconductor stocks in Asia, Europe, and the U.S. rose broadly. South Korea's SK Hynix and Samsung increased by nearly 10% and nearly 3%, respectively. Taiwan Semiconductor, the world's largest chip foundry that manufactures chips for NVIDIA, reached a new high in Asia, with its U.S. stock rising over 5.4%, also hitting a new high.
Global key semiconductor equipment manufacturer ASML saw its European stock rise over 8% and its U.S. stock increase over 9%. Another Dutch chip company, ASM International (ASMI), rose by 6.5%, while Germany's Infineon and European chip foundry STMicroelectronics both rose over 8%.
In U.S. stocks, NVIDIA's main competitor AMD rose nearly 4%, memory chip manufacturer Micron Technology and AI server supplier Advanced Micro Devices (AMD) both rose over 10%, and chip manufacturing equipment stocks Applied Materials, KLA, and Lam Research all rose about 5%. However, Broadcom's gains narrowed significantly after rising nearly 4%, and Intel turned negative after an initial rise of 2%.
One reason for the strong performance of chip stocks: Key company earnings reports indicate that high demand for AI is expected to continue into the new year.
First, analysis generally points out that Foxconn achieved a record high in revenue for the fourth quarter of 2024, with AI demand stimulating its sales revenue to grow by double digits, becoming a major driver for Monday's chip stock rally.
Foxconn's performance indicates that there are almost no signs of a slowdown in demand for artificial intelligence, with strong ongoing demand for AI servers, suggesting that the AI boom will continue into the new year.
Previously, there were concerns that companies' large capital expenditures on AI might not be sustainable. Last year, enthusiasm for artificial intelligence drove the U.S. stock market to new highs, and investors are eager to see if this theme can continue to lead the market.
As the world's largest electronics contract manufacturer, Foxconn stated over the weekend that its revenue for the period from October to December 2024 increased by 15% year-on-year, setting a record for the same period, and although revenue decreased month-on-month in November and December, it still showed growth compared to the same period last year, with December's total operating revenue increasing by over 42% year-on-year, marking the second-highest record for that month in history Its statement emphasized that the market demand for artificial intelligence servers and new computing products is "strong," and the company's automotive-related business is also growing. Its computing products division showed "strong growth," while the smart consumer electronics division experienced a slight year-on-year decline in revenue due to production issues.
The company also provided guidance for the first quarter of this year, expressing confidence in AI demand, expecting "significant growth compared to a year ago." Analysts pointed out that Foxconn's strong sales performance at the end of last year was mainly due to the growth of cloud computing and network products, including AI servers designed by chip manufacturers such as NVIDIA. Foxconn will announce its complete fourth-quarter financial report on March 14.
Reason Two for Chip Stocks Leading: Microsoft and OpenAI Release Positive Signals for AI Demand, Anticipating Jensen Huang's CES Speech
Secondly, last Friday and this Monday, other news also showed strong signs of AI demand, contributing to the lead of chip stocks.
Microsoft announced last Friday that it plans to invest $80 billion in fiscal year 2025 to build data centers capable of handling AI workloads, with more than half of the spending occurring in the United States. OpenAI CEO Sam Altman stated on Monday that the AI computing power used by customers in the ChatGPT Pro product is so substantial that its $200 monthly subscription plan is causing the company to lose money.
The market is also eagerly anticipating NVIDIA CEO Jensen Huang's keynote speech at the world's most influential technology event—the 2025 Consumer Electronics Show (CES) on Monday evening.
Mizuho Securities analyst Jordan Klein stated that the market expects Jensen Huang to provide clues about the release of the next-generation GPU Rubin and other new products, which may further support the semiconductor industry.
Additionally, some analysts noted that Foxconn's performance also provides an optimistic signal for NVIDIA's strongest chip, Blackwell, capacity expansion, leading to larger gains for Micron Technology and South Korea's SK Hynix, which supply high-bandwidth memory chips to NVIDIA.
According to research firm TrendForce, the market size for AI servers is expected to grow from $20.5 billion in 2024 to $29.8 billion in 2025, with AI servers accounting for over 70% of the total value of the entire server industry this year