Taiwan Semiconductor’s quarter renewed faith in AI stocks

CNBC’s Jim Cramer on Thursday suggested a strong quarter from Taiwan Semiconductor renewed Wall Street’s faith in artificial intelligence stocks, including industry leader Nvidia.

“Taiwan Semi made mincemeat of the skeptics who’ve been doubting AI’s staying power,” he said. “They said something that we have only heard from Jensen Huang, CEO of Nvidia — the demand is insatiable and, more important, the profits, they could be humongous for the customers.”

Taiwan Semiconductor, the world’s largest contract chipmaker, beat the estimates and broke a new record, reporting a 35% profit increase. The company has now posted eight consecutive quarters of year-over-year profit growth. Management indicated there is still heavy demand for its products, which are used for advanced AI technology.

Wall Street had largely soured on AI as of late, Cramer said. But Taiwan Semiconductor’s successful earnings suggest business is also strong for customers, namely Nvidia, he continued.

Chip stocks led the market higher on Thursday, with the major indexes finishing in the green. Taiwan Semiconductor hit a new 52-week high and closed up 4.44%, while Nvidia added 2.13%.

Cramer also pinpointed other action from Thursday’s session he feels is positive, including gains in banks and consumer-oriented stocks like restaurants and retailers. He lauded the rise of housing names, noting that the sector broadly had been hit with downgrades recently. He also mentioned the “monster move” in small cap stocks, saying the Russell 2000 managed to break out.

“But the turn in Nvidia, which had become an eyesore of this market, is what gives me hope that the bubble talk may have finally run its course,” Cramer said. “At least for the moment.”

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Disclaimer The CNBC Investing Club holds shares of Nvidia.