Nvidia’s stock is on the rise today after reports emerged that SoftBank Group Corp is pivoting away from Intel Corp and instead opting for Taiwan Semiconductor Manufacturing Co (TSMC) to produce artificial intelligence (AI) chips. This shift comes after Intel allegedly failed to meet SoftBank’s demands for both production volume and speed.
Sources familiar with the situation, cited by the Financial Times, attribute Intel’s shortcomings to its recent financial struggles, which include a reported $7 billion operating loss in its manufacturing business during April and subsequent layoffs. While the move to TSMC presents potential hurdles due to the latter’s already high demand from existing customers, SoftBank remains resolute in its commitment to advancing its AI chip ambitions.
The overall cost of this project is projected to reach tens of billions of dollars. In an attempt to secure the necessary expertise and resources, SoftBank is reportedly seeking additional partners, including industry giants like Alphabet Inc’s Google and Meta Platforms Inc.
Despite a recent selloff that has made its valuation more attractive, Nvidia’s stock has surged over 176% in the last 12 months. The current AI frenzy shows no signs of slowing down, and Nvidia trades at a forward price-to-earnings multiple of 45.05x.
Investors seeking exposure to Nvidia can consider popular ETFs such as the Vanguard S&P 500 ETF (VOO) and the SPDR S&P 500 (SPY).
