Nvidia rebounds after TSMC says AI chip demand remains strong

Nvidia shares rose about 3% during trading on Thursday, rebounding one day after the stock plunged 7% on geopolitical concerns sparked by comments from U.S. presidential candidate Donald Trump.

Nvidia's rise came after TSMC said on Thursday that demand remains high and supply remains constrained for high-end AI chips, which TSMC manufactures for Nvidia.

"I also try to reach the supply and demand balance, but I cannot. Today, the demand is so high I had to work very hard to meet customer demand," Wei told analysts.

"The supply continues to be pretty tight, all the way through 2025," TSMC Chairman C.C. Wei said on Thursday. The manufacturer reported revenue and net income higher than analyst expectations on Thursday, and the stock fell less than 1%.

On Wednesday, the semiconductor sector had its worst day since 2020, with big drops from AMD, Arm, Broadcom and Qualcomm alongside Nvidia. Chip stocks sunk on geopolitics concerns highlighted by comments from U.S. presidential candidate Donald Trump that he was considering a change to U.S. policy to not protect Taiwan from a Chinese invasion without payment. A Chinese invasion would throw Nvidia's chip supply into question.

"While there is rising concern over geopolitical tension given the upcoming US presidential election, TSMC mentioned that it would continue its overseas expansion to mitigate the risks," Citi analyst Laura Chen wrote in a note on Thursday. TSMC is currently constructing a large chip factory in Arizona, partially funded by U.S. subsidies.

Other chipmakers still struggled. Arm was down 2%, AMD fell 2%, and Qualcomm was flat. Super Micro Computer, a key server assembler for Nvidia, fell 2%.

Intel rose over 1%, and Broadcom was up about 3% after a report that said it