Shares of artificial intelligence (AI) semiconductor stocks Nvidia (NASDAQ: NVDA), Taiwan Semiconductor Manufacturing (NYSE: TSM), and Arm Holdings (NASDAQ: ARM) rallied on Friday, up 4.5%, 3.5%, and 10.1%, respectively, in Friday trading.
These three corporations are each big beneficiaries of the AI buildout. Nonetheless, each had also come under pressure through December as technology investors have taken profits after big two-year runs in these stocks.
But a bullish blog post from AI leader Microsoft this morning got these three stocks moving higher again. Here’s what was so positive about what Microsoft needed to say, and why it could have tamped down some recent market fears.
In a blog post this morning, Microsoft Vice President Brad Smith wrote bullishly on the prospects and importance of generative artificial intelligence. As a part of the post, he also disclosed that Microsoft plans to spend a whopping $80 billion on AI data centers in the present fiscal 12 months, which ends in June.
That will have been a nice surprise to some. Microsoft has only reported one quarter of fiscal 2025, and only spent $14.9 billion in capital expenditures to date. Due to this fact, the $80 billion figure given by Smith signals a steeper ramp-up in AI data center spending through June no less than.
While the $80 billion figure could have been the headline that caught attention, the larger thesis of the long blog post was similarly bullish long-term. Within the post, which was addressed to the incoming presidential administration, Smith called AI the “electricity of our age,” and advocated for 3 things: increased investment in AI, investments in skilling programs in order that more Americans can work with AI, and eventually, exporting American AI to allies internationally, in order that others don’t adopt competing AI solutions from China.
Useless to say, increased investments in and usage of AI would profit these three stocks. Nvidia is the dominant general-purpose AI chipmaker today. TSMC is similarly the dominant player in leading-edge chip production today, and clearly counts Nvidia as considered one of its most significant customers, if not crucial. And Arm provides the low-power chip architecture utilized by many smartphone makers, which can be increasingly being adopted in low-power data center chips resembling the Nvidia Grace CPU and the custom CPUs self-designed by large cloud providers.
While the AI trade had a terrific 12 months in 2024, a few of these stocks had a disappointing December. Some reasons for the downdraft were fears over inflation, in addition to the priority that the booming AI spend of the last two years could also be coming to an end. In a December podcast, Microsoft CEO Satya Nadella noted that Microsoft would now not be “chip-constrained” in 2025, because it was in 2024.