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Shares of artificial intelligence (AI) semiconductor stocks. Nvidia (NASDAQ: NVDA), Taiwan Semiconductor Manufacturing (NYSE: TSM)i Arm supports (NASDAQ: ARM) rose 4.5%, 3.5% and 10.1%, respectively, in Friday trading.
These three companies are each major beneficiaries of AI development. However, each had also come under pressure through December as technology investors have taken profits after two-year big runs in those stocks.
But a blog post from the AI leader Microsoft these three shares rose again this morning. Here’s what was so positive about what Microsoft said and why it may have quelled some recent market fears.
In a blog post this morning, Microsoft VP Brad Smith wrote optimistically about the outlook and the importance of generative artificial intelligence. As part of the release, he also revealed that Microsoft plans to spend a whopping $80 billion on AI data centers in the current fiscal year, which ends in June.
This may have come as a pleasant surprise to some. Microsoft has only reported a quarter through fiscal 2025 and has spent just $14.9 billion on capital expenditures so far. So the $80 billion figure given by Smith indicates a steeper increase in AI data center spending through June at least.
While the $80 billion number may have been the headline that grabbed the attention, the larger thesis of the lengthy blog post was equally optimistic for the long term. In the post, aimed at the incoming presidential administration, Smith called AI “the electricity of our time” and advocated for three things: increased investment in AI, investments in skills programs so more Americans can work with AI, and ultimately, by exporting US AI to allies around the world, so that others do not adopt competing AI solutions from China.
It goes without saying that increased investments and use of AI would benefit all three stocks. Nvidia is currently the dominant general-purpose AI chip maker. Similarly, TSMC is the dominant player in today’s cutting-edge chip production, and obviously counts Nvidia as one of its biggest, if not the biggest, customers. And Arm provides the low-power chip architecture used by many smartphone manufacturers, which is also increasingly being adopted in low-power data center chips such as the Nvidia Grace CPU and custom designed CPUs by large cloud providers.
While AI trading had a great year in 2024, some of these stocks had a disappointing December. Some reasons for the decline were fears about inflation, as well as concerns that the AI spending boom of the past two years may be coming to an end. In a December podcast, Microsoft CEO Satya Nadella hinted that Microsoft would it will no longer be “chip-restricted” by 2025as it was in 2024.
