Nvidia’s stock performance and market position
The semiconductor leader Nvidia (NVDA) has experienced an outstanding 2024, with its stock skyrocketing nearly 179% thus far. The positive trend persisted last week with a 2.4% increase, along with a remarkable 13.6% rise in October alone.
The stock wrapped up at 8 on Friday, just under its peak of 8.07, achieved on October 14. Nvidia shares have gained almost 40% from their lows in August, highlighting strong investor faith in the company’s growth path.
With a market capitalization of .4 trillion, Nvidia firmly ranks as one of the most valuable companies globally, just behind Apple at .6 trillion and surpassing Microsoft, which stands at .1 trillion. This positions Nvidia in a strong place within the global tech sector, especially as it continues to play a crucial role in advancing artificial intelligence (AI) technologies.
Considering Nvidia’s essential role in AI and its impressive stock performance, it’s no wonder that analysts and investors are adjusting their price goals upward. The semiconductor and AI software producer is increasingly recognized as a vital contributor to the future of technology, with its offerings being central to the AI boom.
Taiwan Semiconductor’s growth and challenges
Taiwan Semiconductor Manufacturing Company (TSMC), the leading contract chipmaker worldwide, has also been experiencing significant growth driven by increasing demand from tech powerhouses like Nvidia. In its third-quarter earnings report, TSMC reported a revenue of .5 billion USD, reflecting a 36% year-over-year rise. The company achieved an impressive gross profit margin of 57.8%, with a net profit margin of 42.8%, highlighting its operational effectiveness and strong market standing.
TSMC’s expansion is closely correlated with the wider semiconductor industry, which has seen a considerable increase in demand, particularly from firms heavily investing in AI and cloud computing infrastructure. Nvidia, a key partner, has been a significant contributor to this demand, as its GPUs are critical for AI tasks. This mutually beneficial relationship between TSMC and Nvidia has greatly benefited both companies, with TSMC gaining from Nvidia’s rapid growth in 2024.
Nevertheless, in spite of its robust financial performance, TSMC faces several hurdles that could affect its future growth. A major concern is the geopolitical risk surrounding Taiwan. The ongoing tensions between Taiwan and the People’s Republic of China represent a considerable threat to TSMC’s operations. China regards Taiwan as part of its territory, and any escalation in tensions could disrupt TSMC’s supply chain or even directly impact its manufacturing capabilities.
Moreover, TSMC has faced delays in its attempts to broaden its manufacturing presence outside of Taiwan. The company’s initiative to establish a semiconductor facility in Arizona has encountered numerous obstacles, including construction delays and workforce shortages. These challenges have raised doubts about TSMC’s capacity to diversify its manufacturing operations, which is perceived as a vital measure in lessening geopolitical vulnerabilities.
Despite these obstacles, TSMC’s stock has performed well in 2024, increasing by 15.6% in October alone and 93% year-to-date. The company’s market capitalization now surpasses trillion, placing it among elite firms like Apple, Nvidia, Microsoft, Alphabet, Amazon, and Meta Platforms. For Australian investors, TSMC’s growth trajectory is noteworthy, particularly as the semiconductor sector continues to be pivotal in the global economy.