Warren Buffett's big Taiwan Semiconductor buy spurs rally in chip names

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Warren Buffett’s Berkshire Hathaway’s (NYSE:BRK.B) (BRK.A) significant new stake in Taiwan Semiconductor (NYSE:TSM) spurred a healthy rally in other semiconductor stocks on Tuesday as investors searched for signs that the industry may be on the rebound.

Taiwan Semiconductor (TSM) shares rose more than 12% to $81.62 in mid-day trading, while other chip names also gained, including Advanced Micro Devices (AMD), Nvidia (NASDAQ:NVDA) and Marvell Technology (MRVL), all of which are Taiwan Semiconductor customers.

AMD (AMD) and Marvell (MRVL) tacked on more than 5%, while Nvidia (NVDA) added more than 3.5%.

Nvidia (NVDA), which some analysts believe is still dealing with some short-term issues that have impacted the company’s financials, is slated to report third-quarter results after the close of trading tomorrow.

Mobileye (NASDAQ:MBLY) gained more than 5% on back of the Buffett-induced euphoria, as well as investment firm Baird starting coverage on the Intel spinoff.

The research firm started coverage on Mobileye (MBLY) with an outperform rating and a $36 price target, noting it is the leader in autonomous driving and gives investors an “excellent base for growth” as automated driving features continue to expand.

“We are most focused on upside from the company’s premium ADAS offerings, which also serve as the base for MBLY’s planned future consumer/commercial AV offering,” the firm wrote in a note to clients, adding that the company’s automated mobility-as-a-service offers “giant leap potential,” but also additional risk.

“Net, we recommend purchase/would lean into any volatility, for this premier franchise/longer-term optionality,” the firm added.

Other semiconductor stocks also saw modest gains on Tuesday, including Micron Technology (MU), Intel (INTC), Texas Instruments (TXN).

Buffett, who has traditionally shied away from technology, save for some notable exceptions, including Apple (AAPL), purchased 60.1M of the world’s largest foundry in the third quarter, according to its most recent 13F filing.

Last week, Taiwan Semiconductor (TSM) said its October sales rose 56% year-over-year.

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