The semiconductor sector rally Thursday, with chip stocks moving higher after strong signals from key industry players, Taiwan Semiconductor Manufacturing, or TSMC and ASML, reinforced confidence in AI-driven demand. Navitas up 21%; Wolfspeed, Himax, On Semi and Semtech up 10%; AMD up 8%; Intel up 5%; SMCI up 4%; SanDisk up 3%.

TSMC Results Highlight Strong AI Demand

The biggest boost came from TSMC, the world’s leading chipmaker, whose results are seen as a key indicator for the entire industry.

TSMC reported that net profit jumped about 58% year-over-year, driven by strong demand for AI chips. More importantly, the company raised its revenue outlook for 2026, signaling continued momentum. For Q2, TSMC expects revenue between $39.0 billion and $40.2 billion, implying a high single-digit increase from the $35.7 billion reported in Q1.

CEO C.C. Wei said AI demand remains very strong, prompting the company to increase spending to expand capacity and build more advanced chip facilities.

ASML Q1 Results Add to the Momentum

This comes after strong earnings results from ASML, the company that builds the advanced machines used to manufacture chips. By raising its 2026 outlook, ASML signaled that chipmakers are placing heavy orders to keep up with rising AI demand.

In simple terms, ASML provides the tools, TSMC manufactures the chips, and companies like Nvidia and AMD sell the final products. Right now, demand appears strong across the entire chain.