Chip boom propels TSMC into top tech giants

The recent surge of Taiwanese chip giant TSMC into the ranks of the world’s most valuable companies underscores the significant impact of the generative AI revolution on Wall Street. TSMC briefly surpassed the $1 trillion market capitalisation mark, surpassing Tesla to become the seventh most valuable tech giant. The milestone occurred on a day when Alphabet, Apple, and Meta all reached record highs.

Microsoft and Apple dominate the top echelon of the world’s most valuable companies, followed closely by AI chip designer Nvidia. These companies boast global stock market valuations exceeding $3 trillion. Alphabet and Amazon, both exceeding $2 trillion, also feature prominently in the ranking, while Saudi oil giant Aramco, Meta, TSMC, and Tesla complete the top ten.

The semiconductor industry, now the leading sector in the S&P 500, is experiencing unprecedented growth due to the rising demand for chips driven by generative AI. That boom attracts significant investment and government subsidies, such as the Biden administration’s multi-billion-dollar support for US chip factories. Worldwide semiconductor sales are projected to reach a record $611.2 billion in 2024, with further growth expected in subsequent years.

Nvidia, a key player in AI chip design, has seen its market capitalisation increase eightfold since the launch of ChatGPT in November 2022. Nvidia’s GPUs are essential for building generative AI, propelling the company to briefly become the world’s most valuable publicly traded company. Analysts at Wedbush Securities highlight Nvidia’s GPU chips as the new “gold or oil” of the tech sector, with Nvidia, Apple, and Microsoft racing toward a $4 trillion market valuation. TSMC, which manufactures the bulk of Nvidia’s products, is poised to benefit significantly from this booming demand.