Amid the global frenzy of AI deployment, Taiwan Semiconductor, known as the 'King of Chip Foundries,' released an incredibly strong performance report for the third quarter, which essentially 'boosted' the entire chip sector in the U.S. stock market. Earlier this week, chip stocks collectively plummeted due to a surprise profit warning from lithography giant ASML Holding. On Thursday's regular trading hours, Taiwan Semiconductor's U.S. ADR soared by over 12%, the Philadelphia Semiconductor Index, considered a barometer for chip stocks, rose by nearly 3%, and Nvidia, the AI chip leader, hit a historical high in stock price driven by Taiwan Semiconductor's strong financial report.

Despite ASML's performance failure, from a rational investment perspective, this setback in global chip stocks caused by ASML's performance does not mean that the global craze for AI deployment is dissipating or cooling down. ASML's performance actually indicates a continuous surge in demand for AI chips. However, this bombshell financial report does reveal the latest dynamics in the global chip industry, showing that the AI frenzy is still ongoing, especially with all types of AI chips focusing on B-side data centers experiencing high demand, while areas unrelated to AI remain in a state of weak or significantly declining demand.

ASML CFO Roger Dassen has supported this market view in the performance statement. The ASML executive stated that the demand for AI-related chips is indeed increasing rapidly. However, the recovery process in other parts of the semiconductor market is weaker than expected, leading to some logic chip manufacturers postponing lithography machine orders.

Taiwan Semiconductor's latest performance significantly reinforces the viewpoint that the AI craze is still going strong, with a highly explosive demand for AI chips. Regarding the market demand for AI chips, the head of Taiwan Semiconductor, Wei Zhejia, stated during the earnings conference that the outlook for AI chip demand is very optimistic, emphasizing that the demand from Taiwan Semiconductor's customers for CoWoS advanced packaging far outstrips the company's supply.

"The company will fully address customers' demand for CoWoS advanced packaging capacity. Even if the capacity doubles this year and continues to double next year, it will still be far from enough," Wei Zhejia stated during the earnings conference. The capacity for CoWoS advanced packaging is crucial for a broader range of AI chips like Nvidia's Blackwell AI GPU. Nearly all AI innovators collaborate with Taiwan Semiconductor, confirming the real existence of AI-related demand, and I believe this is just the beginning.

Taiwan Semiconductor's management expects the company's full-year revenue to grow by nearly 30%, surpassing the general analyst expectation of 20%-25% and the company's guidance from the previous quarter. The management also anticipates that the revenue related to data center AI server chips from Taiwan Semiconductor this year, which includes a wide range of AI chips like Nvidia's AI GPU and Broadcom's AI ASIC, will more than double.

After the's ASML financial failure, some analysts even shout out, even if ASML's performance is so bad, it actually benefits NVIDIA and other 'AI shovelers' like global AI chip demand are still strong. From the stock price trend, ASML, which holds the lifeline of chip capacity, has significantly underperformed NVIDIA. Unconsciously, the market has given a clear answer in terms of who is the biggest winner of chip stocks with real silver and gold.

Therefore, the performance of the two core giants in the chip industry, ASML Holding and Taiwan Semiconductor, shows a common theme: the logic support for stocks closely related to AI chips can be considered extremely strong. The rising trend of stocks of AI chip leaders like Nvidia may be far from over. Especially in the field of datacenter AI chips, Nvidia, the dominant player with a market share as high as 80%-90%, may continue to hit historical new highs in stock prices, breaking through the commonly expected $150 by analysts, possibly just a matter of time.

The AI frenzy continues to sweep the globe.

The latest performance results of ASML Holding indicate a significant differentiation in the fate of global chip companies: the skyrocketing demand for AI GPUs like Nvidia's in data center servers for handling massive parallel computing patterns and high computing density, driven by artificial intelligence applications such as ChatGPT and Sora, have overshadowed the extremely sluggish demand in other segmented areas of the industry.

Jefferies Financial analyst Janardan Menon from Wall Street stated in a report on Wednesday: "ASML's financial report shows that although demand for chips related to artificial intelligence remains very strong, recovery in other areas is exceptionally lagging, and this trend may continue until 2025."

The global fervent demand for AI chips is clearly reflected in South Korea's chip inventory and the export scale of South Korean chips, where SK Hynix and Samsung, the two largest memory chip manufacturers in the world, are located.

Data released by the South Korean government shows that despite a slowdown in the growth rate, semiconductor exports in September still increased significantly by 37% year-on-year, marking the 11th consecutive month of growth. In this continued growth trend of chip exports, one third of the growth contribution came from HBM memory systems, which are crucial for driving heavyweight AI applications like ChatGPT and Sora, in conjunction with Nvidia's core hardware - the H100/H200/GB200 AI GPUs and a wide range of AI ASIC chips (such as Google TPU) in operation. The stronger the demand for HBM, the more intense the demand for AI chips.

The current demand for AI chips is incredibly strong and is likely to remain so for a very long time. Data recently released by the Semiconductor Industry Association (SIA) shows that driven by the strong demand for AI chips, global semiconductor sales reached around $53.1 billion in August 2024, a 20.6% increase from $44 billion in August 2023, with an additional 3.5% month-on-month increase compared to the already strong $51.3 billion sales in July.

AMD CEO Lisa Su recently stated at a new product launch event that the demand for datacenter ai chips, including AI GPU, far exceeds expectations. It is expected that by 2027, the datacenter AI chip market size will reach $400 billion, further rising to $500 billion in 2028. This implies that the compound annual growth rate of the global datacenter AI chip market size is expected to exceed 60% from 2023 to 2028.

Global renowned strategic consulting firm Bain predicts that as artificial intelligence (AI) technology rapidly disrupts enterprises and economies, all markets related to AI are expanding, reaching $990 billion by 2027. This consulting firm pointed out in its fifth annual "Global Tech Report" released on Wednesday that the overall AI market size, including AI-related services and core hardware like AI GPU, will grow at a rate of 40% to 55% annually from the base of $185 billion last year. This means a massive revenue of $780 billion to $990 billion by 2027.

US banking giant Bank of America recently released a research report stating that the global AI boom is still in its early stages, similar to the development path of the internet in the 1990s. It can be likened to the '1996 moment' of the flourishing development of the internet. According to the Bank of America analysis team, the AI boom is still in a very early stage.

Nvidia's stock price is making a push towards $150.

Referred to as the 'most important stock on earth' by Goldman Sachs, Nvidia's stock price once firmly held the title of 'the world's highest market capitalization listed company' this year, but in the second half of the year, it experienced a pullback due to the unclear prospects of AI monetization and the significant global macroeconomic policy turmoil, causing the stock price to plummet at one point.

Recently, numerous global technology companies, while showcasing their business progress, cannot avoid mentioning Nvidia's cutting-edge AI GPU server systems. Coupled with optimistic predictions from Wall Street banks on datacenter spending and Nvidia's stock price, Nvidia's stock price surged beyond previous highs during Thursday's regular trading hours in the US, hitting a new all-time high of $140.89, with the potential to once again challenge the title of the 'highest market cap public company.'

According to the latest forecast data from the Wall Street financial giant Citigroup, by 2025, the datacenter-related capital expenditures of the four largest technology giants in the United States are expected to increase by at least 40% year-on-year, and these massive capital expenditures are basically linked to generative artificial intelligence, meaning that the computational demands of AI applications like ChatGPT remain significant. Citigroup states that this implies that the giants are expected to further expand their datacenter spending beyond the already strong spending levels of 2024, and the institution expects this trend to continue to provide very significant positive catalysts for the AI GPU undoubted dominator Nvidia as well as datacenter interconnect (DCI) technology providers' stock prices.

In the research report referred to by Citigroup, the four major technology giants are referred to as the global cloud computing giants Amazon, Google, Microsoft, along with the social media company Facebook and Instagram's parent company. In this latest research report, Citigroup anticipates that by 2025, the datacenter capital expenditures of these four major technology giants will increase by 40% to 50% year-on-year. The significant incremental spending by the technology giants on datacenters is expected to continue to favor the stock prices of datacenter network technology giants like Nvidia, Arista Networks, who are considered "shovel sellers" in the AI infrastructure sector and continue to be favored by international funds.

In the latest research report, the Citigroup analyst team stated that Nvidia's server GPUs and NVIDIA's overall server hardware system in the AI infrastructure sector are emphasized as core considerations for datacenter operators in terms of total cost of ownership (TCO) and return on investment (ROI). They emphasize the higher level of performance running various applications (including AI training/inference applications) on Nvidia's hardware and CUDA CoLLab Acceleration Software Platform.

The CUDA ecosystem barrier can be described as Nvidia's "most powerful moat". Nvidia has deeply cultivated the global high-performance computing field for many years, especially its CUDA computing platform created single-handedly that has become popular worldwide, serving as the preferred software-hardware collaborative system for high-performance computing in AI training/inference and other fields. The CUDA acceleration computing ecosystem is an exclusively developed parallel computing acceleration platform and programming assistant software by Nvidia, allowing software developers and engineers to use Nvidia GPU for parallel general-purpose computing acceleration (only supporting Nvidia GPUs, not compatible with mainstream GPUs like AMD or Intel).

The Citigroup analyst team recently reiterated the institution's target price of up to $150 for Nvidia in the next 12 months, as well as a 'buy' rating. TIPRANKS compiled data shows that the average target price expectation for Nvidia in the next 12 months by 42 Wall Street analysts is $152.86, indicating a potential upside of close to 10%.

A recent research report released by the renowned Wall Street investment firm Wedbush stated that the top three tech giants in the U.S.—namely Apple (AAPL.US), Nvidia (NVDA.US), and Microsoft (MSFT.US)—are expected to reach a combined market capitalization of $4 trillion within the next six to nine months.

Wedbush analysts led by Daniel Ives have made some bold and optimistic predictions about AI spending and infrastructure for the future. Ives stated in an investor report, "We believe that as the next generation of AI infrastructure is established, the market size of the entire AI infrastructure dominated by Nvidia's AI GPUs may increase significantly by 10x from today to 2027. We estimate that in the next three years, capital spending in the AI field could reach $1 trillion."

Editor/Lambor