For investors in the semiconductor sector, Advanced Micro Devices (NASDAQ:AMD) remains a top stock to watch in this space. Today, shares of AMD stock surged to a new all-time high in the morning session before giving up most of those gains this afternoon.
This move followed a key earnings report from Taiwan Semiconductor Company (NYSE:TSM), which reported stronger-than-expected fourth-quarter results. The company’s 20% revenue growth projections for the company’s fiscal Q4 came on improved expected demand for artificial intelligence (AI) related chips.
For AMD, a company that’s just on the onset of ramping up production of its own AI chips, this is certainly big news. Let’s dive into what’s driving stocks across this sector higher today.
Why Is AMD Stock Surging Today?
In many cases, it’s very true that a rising tide lifts all boats. In the semiconductor space, a sector that many view as a global oligopoly, a handful of companies really dominate the space. So, when a major player like Taiwan Semi comes out and boosts its forecast, particularly for chips aimed at the AI sector, other key players in this space are bound to get a boost.
Such has been the case today with AMD stock. The company’s MI300 chips certainly have explosive growth potential, if the AI-driven boom we’ve seen continues. For now, it appears investors are attaching a much longer runway than previously thought to this high-growth space.
Now, it’s likely true that AMD will take some time to ramp up and the full effects of its new chips won’t be felt for a few quarters yet. That said, this stock remains a long-duration asset. Most investors buying AMD stock right now likely intend to hold shares for some time. So, forward-looking projections are likely to continue to matter more than backward-looking earnings reports.
We’ll have to see whether AMD comes out and adjusts its forecast in a similar fashion in its upcoming earnings report. But for now, it’s clear the market is pricing in some big-time growth on the horizon.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
