Nvidia Stock Gains. Why Taiwan Semi’s Outlook Is Good News for the Chip Maker.

Nvidia chips are the dominant choice for training artificial-intelligence models. (Joel Saget/AFP via Getty Images)

Nvidia stock rose on Thursday. The chip maker is continuing to feel the benefits of resumed access to the Chinese market.

Nvidia shares were up 1% at $173 in Thursday trading. The stock rose 0.4% on Wednesday.

Continued demand for artificial-intelligence chips was underlined Thursday by Taiwan Semiconductor Manufacturing —Nvidia’s key supplier—which reported a 61% jump in quarterly profit and raised its revenue outlook for the year. American depositary receipts of TSMC gained 3.4%.

“TSMC’s tone in AI is more positive than three months ago, and we think that reflects the recent sovereign demand and all [the] new gigawatt data center plans globally,” wrote Jefferies equity sales specialist William Beavington.

On a conference call after the earnings report, TSMC CEO C.C. Wei said the AI mega-trend continues to be strong and the company has not seen any changes in customer behavior for the second half of this year.

He also said, “demand from AI is getting stronger and stronger if you pay attention to the $4 trillion company CEO,” referencing Nvidia CEO Jensen Huang.

That boom is only likely to get bigger with Nvidia’s return to the Chinese market. During a media briefing in Beijing on Wednesday, Huang praised the country’s technology development, the same week it was confirmed the Trump administration would allow Nvidia to resume selling H20 AI chips in China.

Among other chip makers, Advanced Micro Devices was up 0.2% and Broadcom traded up 2%.

Write to Adam Clark at adam.clark@barrons.com and Tae Kim at tae.kim@barrons.com