Nvidia’s stock rallied on Thursday in the wake of upbeat earnings from Taiwan Semiconductor Manufacturing, but not to the same degree as many other chip plays.

Shares of Nvidia closed up 2.1%, trailing the PHLX Semiconductor Index’s 1.8% gain. And shares of chip-equipment makers KLA and Applied Materials were up far more than that, with gains of about 8% and 6%, respectively.

That might seem like a curious case of underperformance, since most of TSMC’s growth is being driven by Nvidia’s ramp of its Blackwell and Rubin artificial-intelligence platforms. But that dynamic “is already well understood given Nvidia’s guidance,” as well as hefty spending guidance from its hyperscaler customers, D.A. Davidson managing director Gil Luria told MarketWatch in emailed comments.

Plus, TSM’s strength goes beyond Nvidia’s graphics processing units, he said, reflecting well on overall chip demand. The Taiwanese chip maker set expectations for revenue to grow 30% this year, which was ahead of the 25% analysts were forecasting. The company also guided for capital expenditures to reach between $52 billion and $56 billion in 2026, counting plans for fabrication-plant buildouts in Arizona and Taiwan.

Nvidia’s stock isn’t just a laggard on Thursday. It’s up just over 1% so far this year, while the PHLX Semiconductor Index is up more than 9%. And the dynamic could prove self-reinforcing, suggested Mizuho trading-desk analyst Jordan Klein.

Not only have investors realized they need to broaden their AI exposure beyond shares of Nvidia and Broadcom, but those who haven’t owned enough of some of the sector’s biggest recent winners now may find themselves in a predicament, he noted. To keep up with big moves in memory, optical and chip-equipment stocks, institutional investors might have to sell part of their Nvidia positions to fund investments in hotter areas of the tech sector, Klein said in a note to clients on Thursday.

Funds risk falling further behind their benchmarks if they aren’t adequately exposed to stocks driving outsize gains.

Retail investors, too, might be looking at Nvidia’s recent stock performance and seeking to “chase other segments of memory on fire,” Klein wrote. Nvidia needs to beat and raise by more than its average to get momentum going again, he added.

Nvidia’s stock has climbed just 38% from a year ago, while memory-chip stock Micron Technology has soared 233%, and shares of storage leaders Seagate Technology and Western Digital have jumped 245% and 367%, respectively.

Chip-equipment stocks are some of the market’s biggest gainers this year, up 20% to 30% — a trend that could make the rotation within the semiconductor sector “potentially worse near term,” according to Klein.

Like Nvidia’s stock, Broadcom shares have also underperformed to start 2026: They were up 2.2% in Thursday’s session and ahead only 0.3% on the year.