TLDR:
- AI-related semiconductor stocks, including Nvidia, AMD, and Broadcom, are rising due to the U.S. Fed’s decision to cut interest rates.
- The rate cut is expected to boost growth and discretionary spending in the semiconductor industry.
In a recent move, semiconductor stocks linked to artificial intelligence technology, such as Nvidia Corp, Broadcom Inc, Advanced Micro Devices, Inc, Arm Holdings plc, and Super Micro Computer, Inc, saw an increase in their stock prices following the U.S. Federal Reserve’s decision to cut benchmark interest rates by 50 basis points. This decision, the first since 2020, sets the interest rate between 4.75% and 5%, with the aim of stimulating economic growth.
The rate cut is seen as beneficial for semiconductor companies, especially those heavily invested in artificial intelligence technology, as it is expected to ease financial pressure amid significant capital expenditures on AI ambitions. Additionally, the semiconductor industry has been facing challenges due to U.S. sanctions on China, a key market for these companies. Investors are closely monitoring the stance of the next President towards China, with expectations of a more favorable approach for the semiconductor sector.
Despite the challenges, semiconductor companies are making strategic moves to strengthen their positions. For example, Taiwan Semiconductor Manufacturing Co, a crucial AI chip supplier, is heavily investing in its Arizona fab construction to produce AI chips after securing U.S. chip subsidies. They have also secured smartphone chip deals with major companies like Google and Apple.
Currently, stock prices of key AI-related semiconductor companies are on the rise. NVDA stock is up 3.16% at $116.95, AMD is up 3.74% at $153.84, AVGO is up 3.45% at $167.25, SMCI is up 3.00% at $450.00, TSM is up 2.80% at $171.97, INTC is up 2.31% at $21.25, and ARM is up 3.78% at $143.59.