Chip stocks are starting the week off on a high note after tech manufacturer Foxconn reported a solid earnings beat, pointing to strong demand for artificial intelligence servers.
Nvidia rallied 5% Monday, joining other US chip stocks like Advanced Micro Devices and Micron Technology, up 4% and 12%, respectively. Broadcom and Qualcomm, meanwhile, each climbed about 3%.
Non-US chip stocks like Taiwan Semiconductor Manufacturing, the world’s largest contract chip maker, also surged, up 5%, and chipmaking machinery producer ASML gained 8%.
The rally comes after Foxconn reported strong quarterly earnings driven by its cloud and networking segments, and pointing to the potential for sustained strong demand for AI chips.
In a statement on Sunday, the company reported revenue of 2.132 trillion New Taiwan dollars, or $64.75 billion, for the fourth quarter of 2024.
That’s up 15% from the same period a year prior and marks the company’s highest fourth-quarter revenue on record. The growth also exceeds analysts’ expectations, who had estimated revenue totaling NT$2.07 trillion, according to FactSet.
Foxconn, which is a manufacturing partner for mega-cap tech giants like Apple and Nvidia, said the revenue growth for its cloud and networking products came from strong demand for its AI servers, pointing to positive signs for chip demand as analysts wonder how long the industry’s dominance over the greater market will last.
Nvidia on Monday is also soaring ahead of remarks from the company’s CEO, Jensen Huang. Huang will deliver the keynote address at the opening night of the Consumer Electronics Show in Las Vegas. His past appearances at the trade show have been positive catalysts for the stock.
The sector is also experiencing positive momentum after Microsoft announced last week a plan to spend $80 billion on AI data centers.
Chip stocks have led the S&P 500’s stunning rally in the last two years, with Nvidia alone up 171% last year. Investors have shown some worries about returns on heavy investments in AI, though, which helped lead to a brief sell-off over the summer.
Foxconn also gave upbeat forward guidance, saying it expects “significant growth” in sales for the current quarter.
“Even with record high revenue in the fourth quarter of 2024, the sequential performance of the first quarter will reach roughly similar levels that are average to the past five years; compared with a year ago, it should show significant growth,” the company said.
Foxconn rallied 3% after the revenue beat.
