Shares of artificial intelligence (AI) semiconductor stocks Nvidia (NVDA 4.45%), Taiwan Semiconductor Manufacturing (TSM 3.49%), and Arm Holdings (ARM 10.05%) rallied on Friday, up 4.5%, 3.5%, and 10.1%, respectively, in Friday trading.
But a bullish blog post from AI leader Microsoft this morning got these three stocks moving higher again.
Therefore, the $80 billion figure given by Smith signals a steeper ramp-up in AI data center spending through June at least.
That is perhaps why Smith’s blog post this morning was so reassuring for Nvidia and the entire semiconductor ecosystem.
That’s why not only Nvidia, but really the entire AI semiconductor ecosystem, got a big boost today.
Stocks of artificial intelligence (AI) semiconductor companies Arm Holdings (ARM 10.05 percent), Taiwan Semiconductor Manufacturing (TSM 3.49 percent), and Nvidia (NVDA 4.45 percent) all saw large gains in Friday trading, rising 4.5 percent, 3.5 percent, and 10.1 percent, respectively.
Each of these three businesses has benefited greatly from the AI rollout. Each, though, was also under pressure through December as tech investors profited from significant two-year rallies in these stocks.
However, these three stocks moved higher again this morning after Microsoft, a leader in AI, wrote a bullish blog post. This is what made Microsoft’s remarks so encouraging and why they might have allayed some recent market anxieties.
$80 billion for capital investments in AI.
Microsoft Vice President Brad Smith expressed optimism about the future and significance of generative artificial intelligence in a blog post this morning. He also revealed in the post that Microsoft intends to invest an astounding $80 billion in AI data centers during the current fiscal year, which concludes in June.
To some, that might have been a welcome surprise. Microsoft has only reported $14.09 billion in capital expenditures so far in the first quarter of fiscal 2025. Smith’s estimate of $80 billion thus denotes a more rapid increase in AI data center expenditures through at least June.
Although the attention-grabbing headline may have been the $80 billion figure, the lengthy blog post’s main argument was equally optimistic about the long run. Smith referred to AI as the “electricity of our age” in the post, which was addressed to the incoming presidential administration. Smith also pushed for three measures: more funding for AI, skilling programs to enable more Americans to work with AI, and exporting American AI to allies abroad to prevent other countries from implementing rival AI products from China.
It goes without saying that these three stocks would gain from more AI investments and use. Today, Nvidia is the leading manufacturer of general-purpose AI chips. TSMC is also the industry leader in the production of cutting-edge chips today, and it is clear that Nvidia is one of, if not the most, of its most significant clients. Additionally, many smartphone manufacturers use Arm’s low-power chip architecture, which is also being used more and more in low-power data center chips like the Nvidia Grace CPU and the custom CPUs that big cloud providers have designed themselves.
For the time being, quelling fears.
Some of these stocks had a poor December, despite the AI trade having a fantastic year in 2024. Concerns about inflation and the potential end of the boom in AI spending over the past two years were some of the factors contributing to the downdraft. Microsoft CEO Satya Nadella stated in a December podcast that while the company was “chip-constrained” in 2024, it would not be in 2025.
That might have meant that the demand for AI infrastructure was decreasing, that TSMC was increasing its capacity to produce more Nvidia chips, or both. The statement somewhat tarnished Nvidia, especially after its enormous gains up to that point, because Microsoft is currently the largest buyer of Nvidia chips.
Smith’s blog post this morning was reassuring for Nvidia and the semiconductor industry as a whole, possibly because of this. The $80 billion amount appeared to suggest that the absence of chip restrictions Nadella had previously stated was caused by a rise in supply rather than a demand issue.
The entire AI semiconductor ecosystem, not just Nvidia, benefited greatly today as a result.
