Artificial Intelligence (AI) Semiconductor Stock Prices Nvidia (NVDA 4.45%)Taiwan Semiconductor Manufacturing (TSM 3.49%)Arm Holdings (arm 10.05%) They rose 4.5%, 3.5%, and 10.1%, respectively, in Friday trading before rebounding on Friday.
Each of these three companies has benefited greatly from building AI. But each stock was under pressure through December as tech investors took profits after two years of strong gains in these stocks.
But a bullish blog post from AI leader Microsoft this morning sent these three stocks back up. Here’s what was so positive about Microsoft’s statement and why it may have allayed recent market concerns.
$80 billion in AI capital investment
In a blog post this morning, Microsoft Vice President Brad Smith was bullish about the prospects and importance of generative artificial intelligence. As part of his post, he also revealed that Microsoft plans to spend a whopping $80 billion on AI data centers this fiscal year, which ends in June.
That may have been a pleasant surprise for some. Microsoft has only reported one quarter of fiscal 2025 and has spent only $14.9 billion in capital expenditures so far. Smith’s $80 billion number thus indicates an even sharper rise in spending on AI data centers through at least June.
While the $80 billion number may have been the headline that grabbed attention, the larger theme of the lengthy blog post was similarly bullish over the long term. In this post addressed to the incoming presidential administration, Smith calls AI “the power of our time” and urges them to increase investment in AI and make it available to more Americans. investment in skills programs, and finally advocated for three things. , exporting American AI to allies around the world to prevent other countries from adopting China’s competing AI solutions.
It goes without saying that if investment and utilization of AI increases, these three stocks will benefit. Nvidia is currently the leading general purpose AI chip maker. TSMC is similarly a dominant player in today’s cutting-edge chip production, and clearly counts Nvidia as one of its most important customers, if not its most important. Arm also offers a low-power chip architecture used by many smartphone manufacturers and is increasingly being adopted in low-power data center chips such as Nvidia Grace CPUs and custom CPUs designed in-house by major cloud providers. .
Allay your fears for now
2024 was a great year for the AI industry, but some stocks had a disappointing December. Reasons for the downdraft include concerns about inflation and fears that the surge in AI spending of the past two years may be coming to an end. Microsoft CEO Satya Nadella said on a podcast in December that in 2025, Microsoft will no longer be as “chip-constrained” as it was in 2024.
This could suggest that TSMC is ramping up production capacity for Nvidia chips, or that demand for AI infrastructure is slowing, or both. Notably, Microsoft is currently the largest purchaser of Nvidia chips, so this statement kind of casts a shadow on Nvidia, especially after the monster profits to that point.
Perhaps that’s why Smith’s blog post this morning was such a relief to Nvidia and the entire semiconductor ecosystem. The $80 billion figure seems to indicate that the lack of chip constraints that Nadella mentioned last month are due to increased supply and not necessarily a demand issue.
That’s why not only Nvidia, but the entire AI semiconductor ecosystem, received a huge boost today.
Billy Duberstein and/or his clients work for Microsoft and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
