Why Nvidia Stock Is Getting a TSMC Boost

Nvidia chips are the favored choice for training artificial-intelligence models. (David Paul Morris/Bloomberg)

Key Points

• Nvidia’s stock rose 3.5% in early trading, recovering from a 9% drop over the past five sessions.
• Analysts project strong revenue growth for Nvidia’s upcoming earnings report due to increased AI hardware spending.
• Nvidia CEO Jensen Huang met with TSMC executives, with reports suggesting a potential 50% monthly increase in 3-nanometer wafer production.

Nvidia stock was rising early Monday amid market cheer over the potential end of the U.S. government shutdown and optimism over CEO Jensen Huang’s meeting with executives at Taiwan Semiconductor Manufacturing .

The chip maker’s shares were up 3.5% at $194.93 in early trading. The stock had fallen about 9% over the past five trading sessions.

The move is broadly in line with the wider market. Among other chip makers, Advanced Micro Devices gained 4.3% and Broadcom was up 1.9% in morning trading.

Nvidia is now in the run up to its earnings report on Nov. 19, when increased spending on artificial-intelligence hardware from major technology companies is likely to be reflected in strong revenue growth. Analysts at UBS recently raised their estimates for global AI capital expenditure to $423 billion this year and $571 billion in 2026, from $375 billion and $500 billion previously.

Huang visited Taiwan over the weekend, meeting with executives of key supplier Taiwan Semiconductor Manufacturing, or TSMC. Taiwanese media reported that Nvidia’s orders could require TSMC to boost production of its 3-nanometer wafers—the base material for semiconductors—at sites in Taiwan by as much as 50% a month.

TSMC Chief Executive C.C. Wei told reporters that Huang had asked for more wafer production but the exact number was confidential, Reuters reported. TSMC reported record monthly sales for October on Monday but its 17% growth was the slowest annual rate the chip manufacturer recorded since February 2024.

Wall Street is largely optimistic about Nvidia’s earnings. Citi analyst Atif Malik raised his target price on the stock to $220 from $210 in a research note Monday, arguing supply is the bottleneck in AI chips, not demand.

That’s a view shared elsewhere. Melius Research analyst Ben Reitzes reiterated a Buy rating and $300 target price on Nvidia stock in a research note.

“Given strong checks, hyperscaler buying and recent sovereign licenses, we are expecting upside to data center revenues for F3Q October quarter and upside to F4Q guidance for January, with positive commentary on the GB300 and overall demand trends,” Reitzes wrote.

Write to Adam Clark at adam.clark@barrons.com