AI Chip Stocks Gain After Oracle Earnings And Mega Cloud Deals

Artificial intelligence chipmakers saw strong momentum this week as corporate earnings, cloud computing contracts, and surging demand for AI infrastructure fueled gains across the sector.

Nvidia NVDA, Broadcom AVGO, Marvell MRVL, and Advanced Micro Devices AMD were among the beneficiaries, lifted by a series of developments involving Oracle ORCL, OpenAI, Microsoft MSFT, and Taiwan Semiconductor Manufacturing Co. TSM.

Oracle ORCL reported fiscal first-quarter earnings of $1.47 per share on revenue of $14.92 billion, up from $13.3 billion a year earlier but shy of consensus estimates.

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Cloud revenue climbed 27% to $7.2 billion, led by 54% growth in infrastructure-as-a-service. Multi-billion-dollar contracts pushed backlog up 359% to $455 billion.

CEO Safra Catz forecast Oracle Cloud Infrastructure revenue to grow 77% this fiscal year and hit $144 billion within four years.

Analysts credited the quarter to robust AI infrastructure demand. Oracle also secured a five-year, $300 billion deal with OpenAI, starting in 2027, to provide cloud capacity for its Stargate data centers.

Microsoft reached a separate agreement with OpenAI that relaxes exclusivity on Azure, while boosting investment in in-house AI chips to reduce supplier reliance.

Taiwan Semiconductor reinforced demand momentum with August revenue of 335.77 billion New Taiwanese dollars, up 3.9% from July and 33.8% year-on-year. Cumulative sales rose 37.1% to 2.43 trillion New Taiwanese dollars.

Broadcom posted third-quarter revenue of $15.95 billion, up 22% year-over-year, with AI revenue soaring 63% to $5.2 billion. The company confirmed a $10 billion custom AI chip order from OpenAI and guided fourth-quarter AI chip sales to $6.2 billion. CEO Hock Tan cited “immediate and substantial demand,” lifting long-term growth targets.

AI investment from Big Tech remains the key driver. Meta Platforms META, Microsoft, and Alphabet GOOGL are projected to spend more than $240 billion on AI infrastructure by 2026, cementing what Wedbush’s Dan Ives called a “watershed moment” for technology.

The PHLX Semiconductor Index has gained over 20% year-to-date, rising 6% in the last five days. Nvidia and Broadcom, up 32% and 55% year-to-date, respectively, saw their shares rise 6% and 7% in the same period. However, Marvell gained 4% after plunging 40% year-to-date, while AMD lost 4% despite being up 29% year-to-date.

Price Action: NVDA stock is trading higher by 0.27% to $177.65 premarket at last check Friday. AVGO is up 0.31% and MRVL is up 1.59%.

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