What's Driving AI Stocks to Record Highs: SMCI, NVDA, AMD, META and More

$Advanced Micro Devices(AMD.US)$ and $NVIDIA(NVDA.US)$ hit all-time highs on Fridai as investors continue to clamor for shares of the companies building chips that power artificial intelligence. $Super Micro Computer(SMCI.US)$, a top-performing tech stock, saw a 36% surge in its shares, reaching a new high after the company released preliminary financial results that exceeded expectations. The shares of $Meta Platforms(META.US)$ rose almost 2% Friday to close at $383.45, setting a new record as well. The rally follows an almost 200% jump last year.

• Investors' unrelenting interest and appetite for companies creating and selling graphics processors for artificial intelligence is reflected by the record-high valuations. Although originally designed for computer gaming, GPUs have now become essential for training and deploying complex AI models such as OpenAI's GPT, resulting in a significant surge in chip sales. Nvidia has been the primary GPU supplier to AI companies for two years and was the top-performing stock in the $S&P 500 Index(.SPX.US)$ in 2020. However, investors are becoming more optimistic about AMD, the second-largest standalone GPU maker. AMD released a new chip that could challenge Nvidia's H100, which is currently the standard for AI applications. Additionally, AMD is expected to enhance its AI software, eliminating a significant disadvantage it had compared to Nvidia.

• $Taiwan Semiconductor(TSM.US)$ announced better-than-expected sales, stating that there is strong demand for AI chips which use the most advanced manufacturing techniques. The company's CEO, C.C. Wei, believes that AI chips could represent a "high-teens" percentage of their revenue in five years. This is expected to have positive implications for both Nvidia and AMD, according to analysts at $Goldman Sachs(GS.US)$.