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Chip stocks are riding high, and here's why: Foxconn (FXCOF), aka Hon Hai Precision Industry, just dropped some eye-popping numbers. Quarterly revenue shot up 15% year-over-year to $64.75 billion, driven by an insatiable appetite for AI servers. That news sent Micron Technology (NASDAQ:MU) soaring 11%, with its high-bandwidth memory chips cementing their role as the backbone of AI processors. Heavy hitters like Taiwan Semiconductor Manufacturing (NYSE:TSM) and Nvidia (NASDAQ:NVDA) weren't left out, posting 5% and 4% gains respectively, as the entire semiconductor supply chain got a confidence boost.
Microsoft (NASDAQ:MSFT) is doubling down on AI, pledging $80 billion to build AI-enabled data centers in fiscal 2025, while OpenAI is maxing out server capacity to keep up with demand for its ChatGPT Pro. Foxconn's December sales alone jumped 42%, a clear signal that AI isn't just a trendit's an economic force. According to TrendForce, the AI server market is expected to skyrocket to $298 billion by 2025, making up over 70% of the server industry's value. This isn't a future bet; it's happening now.
Eyes are now on Nvidia CEO Jensen Huang's CES keynote, where investors hope for more insight into AI's next big leap. Meanwhile, chip equipment makers like Applied Materials and KLA are riding the wave too, with stock prices climbing. The bottom line? The AI revolution is transforming tech, and semiconductor stocks are the big winners in this shift. If you're not paying attention, you're missing the biggest story in tech investing right now.
This article first appeared on GuruFocus.