The stock market just got its first signal from earnings that the AI trade is still booming

• Earnings season has begun and investors are cheering the strength of AI trading on Thursday.

• The Taiwanese semiconductor company raised its forecast for AI spending and reported strong growth.

• The strong performance helped traders overcome renewed fears of a trade war amid recent tensions.

Earnings season has begun, and investors are analyzing the results to see if their favorite trade can survive through the end of the year.

Fortunately, Wall Street got a clear signal Thursday that the AI ​​trade is still alive and well, as one of the largest semiconductor companies reported stellar third-quarter results. Shares jumped in morning trading, with investors largely focused on chip stocks.

Here's where the major indexes were shortly after the opening bell at 9:30 a.m. ET Thursday:

Taiwan Semiconductor Manufacturing Company raised its full-year forecast and issued an upbeat forecast for AI spending as reported Revenue in the third quarter was $33.10 billion, up 40.8% year over year and 10% higher than the prior quarter. Compared to the second quarter, third quarter results showed revenue growth of 6.0% and net income growth of 13.6%.

Company executives haven't been shy about where they think the new forces are coming from, specifically pointing to the huge demand from AI. CEO CC Wei said at a press conference that the company is convinced that “the megatrend in artificial intelligence is accelerating.”

Shares of other chip makers jumped on news of the strong results, with shares of Nvidia and Broadcom rising 1%.

TSMC's results also helped investors shake off another big fear this week, namely that the trade war will once again weigh on the market.

There was a fresh surge in tariff concerns this week as the White House insisted it would take a tough stance on China in light of its latest moves to curb the flow of rare earth materials.

Treasury Secretary Scott Bessent said Wednesday that investors shouldn't count on the administration changing its trade stance to prop up a weakening stock market. The so-called TAKO trade was already on display this week after Donald Trump calmed nerves with a post on Sunday after tough talk about Chinese tariffs last Friday sent stocks plunging.

Meanwhile, TSMC wasn't the only technology update to lift investor sentiment.

Foxconn, known for making key components for Apple, recently said its chairman has met with OpenAI representatives and plans to meet with Nvidia in the near future.

The creator of ChatGPT was on transaction deal has recently signed contracts with companies such as Nvidia, Advanced Micro Devices and Oracle.

As one leading AI vendor raises recommendations and another explores a deal with OpenAI, investors are once again betting that the AI ​​craze will continue to push the market higher.

Despite volatility fueled by trade war fears, stocks are poised for a strong week of gains, with the S&P 500 up nearly 1% since last Friday's close.

Read the original article at Business Insider