Why Applied Materials and ASML Holding Stocks Bounced Nearly 5% Higher Today

The semiconductor industry had quite the trading session on the stock market Thursday. The 800-pound gorilla of the sector delivered satisfying quarterly results, and as a consequence, many chipmakers and affiliated companies saw their share prices rise in sympathy.

Among the numerous gainers were Applied Materials (AMAT 4.54%) and ASML Holding (ASML 4.53%), both of which gained 4.5% in share price on the day. That figure was more than good enough to trounce the benchmark S&P 500 index, which bumped less than 1% higher.

Taiwan Semi delivers on quarterly results

Said gorilla is mighty contract manufacturer Taiwan Semiconductor Manufacturing (TSM 9.79%), whose stock zoomed almost 10% higher in price following the publication of its latest set of quarterly results. Although the powerful semiconductor beast posted year-over-year declines in both revenue and earnings for its fourth quarter, both figures comfortably beat the average analyst estimates.

Stocks, of course, tend to trade on future potential and not trailing performance, so the real juice in Taiwan Semi’s results was its guidance.

Among numerous bright spots here is the company’s projected return to top-line growth in its current (first) quarter. The cherry on top is that this feat should repeat for every other quarter of 2024, ultimately providing annual revenue with at least a 20% rise over last year’s figure.

AI-powered growth

What’s good for the bellwether semi stock is usually good for its chipmaking peers, too, no matter their niche.

This year should see heavy demand from businesses jostling to either roll out or improve their artificial intelligence (AI) offerings. It almost goes without saying that AI is a resource-intensive activity necessitating fast and powerful processors; this plays very well into the hands of nearly any business with next-generation products.