Why Nvidia Stock Jumped Today
Key Points
Fears of a slowdown in AI infrastructure expansion seem to be unfounded.
Nvidia supplier Taiwan Semi plans capital expenditures to rise well above expectations this year.
That provided a signal for AI investors.
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Nvidia (NASDAQ: NVDA) stock surged today as investor concerns about a peak in artificial intelligence (AI) spending are waning. Today's data point comes from Nvidia partner and supplier Taiwan Semiconductor Manufacturing.
Nvidia shares jumped as much as 3.3% this morning, and were still trading up 2.8% as of 10:38 a.m. ET.
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Image source: Nvidia.
AI boom continues
Taiwan Semi (TSMC) manufactures chips for Nvidia, utilizing its advanced semiconductor fabrication technologies to produce Nvidia's high-performance graphics processing units (GPUs) and other semiconductor products. TSMC beat expectations when it reported fourth-quarter results today. Net profit soared 35%, but a bigger piece of information from the company was the surge in capital expenditures it has planned.
Management forecasts as much as $56 billion in capital spending for 2026, handily above expectations as well as 2025 spending of about $41 billion. That signals to market watchers that the company sees staying power in AI chip growth.
It would only make sense for TSMC to commit that much future capital for growth if AI leader Nvidia let the company know orders would be there. That should tell investors that Nvidia's backlog doesn't look to be slowing. Indeed, it likely continues to grow, constrained only by manufacturing capacity.
That led many investors to double down on Nvidia stock today, too.
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Howard Smith has positions in Nvidia and has the following options: short February 2026 $170 calls on Nvidia. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
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