AI To Drive Tech Earnings

Tech giant Apple is developing a new generative AI program to compete with the likes of OpenAI’s ChatGPT and Google’s Bard. Shares in Apple reached a fresh record high on this news. Tech giants Apple and Amazon are set to release their earnings reports after the market closes on Thursday this week. Given the significant gains in the tech sector this year, investors are closely watching their earnings. However, there are concerns that negative news from these reports could impact the bullish momentum and potentially slow down the rally. Nevertheless, reports from other major companies have generally exceeded expectations, boosting investor confidence.

TSMC pessimistic on hopes for AI-driven boost in chip demand: Taiwan Semiconductor Manufacturing Co (TSMC) – also known as TSMC – posted second-quarter earnings that topped estimates, but the world’s biggest contract chipmaker poured cold water on expectations that the boom in AI interest will fuel a surge in chip demand. Net profit at TSMC tumbled, although this was still above expectations of analysts. TSMC subsequently slashed its annual revenue guidance, saying it expects the figure to slip by 10% in 2023 versus its previous outlook for a single-digit drop. The move stood in contrast to bullish comments earlier this year from the chip industry from Nvidia, one of TSMC’s largest customers. Nvidia previously forecast a jump in semiconductor demand later this year, citing the need for computing parts to power AI programs.

Intel, a major chipmaker, experienced a significant increase in its stock price, rising 7% after reporting unexpectedly strong quarterly results. The company has faced challenges due to declining PC sales and tough competition in the data center market, which affected its profits in the past. However, their recent profit and optimistic earnings forecasts indicate that the slump in the personal computer market might be coming to an end. This positive news led to a surge in Intel’s stock value and also lifted the wider chip sector. The turnaround in Intel’s fortunes is seen as a promising sign for the company and other chipmakers, with expectations of better quarters ahead. As a result, many Wall Street analysts raised their price targets for Intel’s stock, projecting continued growth. This upward trend also had a positive impact on other chip companies like Advanced Micro Devices, Nvidia, and Qualcomm, whose stock prices also rose.

In recent years, Intel has faced tough competition from companies like Taiwan’s TMSC and Nvidia, and this has affected their market value. However, their recent strong performance is signaling a comeback. Despite a 30% increase in Intel’s stock this year, it lags behind Nvidia, which experienced a more than three-fold rise and became the first chipmaker to achieve a trillion-dollar market value in May. Nvidia’s success is largely due to its involvement in the booming artificial intelligence market, an area where Intel has a smaller presence. Nonetheless, Intel’s positive outlook and performance are encouraging for the future of the company and the chip industry as a whole.


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