NVIDIA concept stocks have performed strongly since 2023. What is the investment value?

The Rise and Market Performance of NVIDIA Concept Stocks

Entering the second half of 2024, investment topics surrounding NVIDIA (NVDA) continue to heat up. This global chip design giant’s stock price has experienced intense volatility — in mid-June, its market capitalization once surpassed $3.34 trillion, even briefly overtaking Apple and Microsoft to become the world’s most valuable company. However, the good times did not last, as subsequent adjustments caused the stock to retreat over 20% by the end of the month, shrinking its market value by nearly $800 billion in two weeks. Fortunately, after August, the decline halted, and by mid-October, NVIDIA’s stock price rebounded to around $134.80, close to its all-time high.

The ups and downs of NVIDIA’s stock price have naturally driven the行情 of upstream and downstream supply chain companies. As a leading foundry, TSMC (2330.TW) disclosed that its September revenue reached NT$251.8 billion in October, a 39.6% year-over-year increase, setting a new record, and announced that its Kaohsiung plant will begin mass production of 2nm chips in 2025. Boosted by this, TSMC’s stock surged to NT$1055. Meanwhile, in the semiconductor packaging and testing sector, ASE Technology Holding (3711.TW) reported September revenue of NT$55.579 billion, nearly an 11-month high, and announced the launch of a new plant in Kaohsiung, with its stock rising accordingly to NT$158.

What Are NVIDIA Concept Stocks and Why Are They Worth Attention

As a fabless company, NVIDIA only handles GPU chip R&D and marketing, with actual manufacturing entirely relying on third-party foundries. This business model determines the structure of the entire industry chain — upstream are chip manufacturers like TSMC, downstream are packaging and testing companies like ASE, and various server manufacturers. Taiwan’s long-standing technological accumulation in electronics has made many local companies core parts of NVIDIA’s supply chain. These companies, highly tied to NVIDIA’s business, are called “NVIDIA concept stocks” by the market.

Since 2023, investing in NVIDIA concept stocks has performed remarkably well, driven by NVIDIA’s dominant position in AI, deep learning, cloud computing, and autonomous driving. As these fields flourish, the entire industry chain is on a fast growth track. Hardware manufacturers, software developers, and service providers all benefit from NVIDIA’s technological innovation and industry upgrades.

Taiwan and US Stock NVIDIA Concept Stocks Overview

Main concept stocks in Taiwan:

Related US stocks:

Outlook and Investment Suggestions for Major NVIDIA Concept Stocks

TSMC: Solid fundamentals, long-term value confirmed

As the world’s largest foundry, TSMC is gradually becoming a core supplier for NVIDIA and other AI chipmakers. Its high-performance computing segment now accounts for 52% of revenue, surpassing smartphones to become the largest income source. The market generally expects this segment to maintain strong growth as more major companies increase AI infrastructure investments.

From a valuation perspective, TSMC’s 2024 P/E ratio is about 28x, expected to fall to 22x in 2025, which is reasonable for a leading industry player with stable profitability. Over the past 20 quarters, TSMC has consistently exceeded market expectations, demonstrating excellent operational efficiency.

In the short term, the focus will be on the mid-October earnings briefing, where the company will disclose Q4 forecasts and 2025 outlook. Technically, the stock shows a bullish pattern, with the 20-day moving average crossing above the 60-day moving average, indicating solid short-term support.

ASE: Ambitious expansion with broad long-term space

As a leader in semiconductor packaging and testing, ASE’s short-term stock response has been muted, but the company is active. Recently, it announced acquisitions of factories in Southeast Asia and Korea, further deepening its automotive and industrial control layouts. Although its current gross margin is 16.1%, below the 20-30% level brought by advanced packaging and testing technologies purchased from NVIDIA, incremental business from NVIDIA will effectively boost overall profits.

However, the technical picture is somewhat chaotic, with multiple moving averages crossing and intertwining, reflecting market uncertainty about the future direction. Investors are advised to be cautious in the short term and wait for clearer signals.

KYEC: Growth in performance expected

The company not only possesses advanced GPU testing capabilities but also dominates over 50% of FPGA chip testing capacity. Since GPUs, FPGAs, and high-speed Ethernet are the three key components of AI computing, KYEC’s competitive advantage is prominent. The company has increased its 2024 capital expenditure from NT$5.3 billion to NT$13.8 billion, demonstrating management’s confidence in future growth.

Wistron and Quanta: Main players in server manufacturing

Wistron, as a major supplier for NVIDIA’s DGX and HGX servers, produces NVIDIA GPU motherboards. With NVIDIA’s CEO publicly stating that a new supercomputer will be outsourced to Wistron, the company’s performance is expected to further improve.

Quanta has established a strong partnership in AI server fields. The latest revenue report shows AI server business accounts for over 70% of non-PC product revenue, becoming a primary growth driver.

GIGABYTE: Explosive growth in server business

GIGABYTE’s subsidiary, GIGABYTE Technology, is a certified supplier for NVIDIA, responsible for server rack and product supply. Its server business share surged from 21% in 2023 to 50% in Q1 2024, exceeding 60% in Q2. Strong sales of H100 and H200 models, with upcoming B200A and GB200 products, are already in the pipeline.

MediaTek: New exploration in AI chips

In May 2023, MediaTek announced cooperation with NVIDIA, jointly developing automotive AI chips. The first chip targets smart cockpit applications, expected to launch in 2025 and contribute revenue from 2026. Additionally, MediaTek and NVIDIA are collaborating on PC AI chips, with designs finalized and mass production scheduled for late 2025, potentially breaking AMD and Intel’s x86 dominance.

ARM: Investment potential and risks

NVIDIA once planned to acquire ARM for $40 billion but was unsuccessful, though it still holds a large stake. The latest holding value is about $147 million, accounting for over 60% of NVIDIA’s investment portfolio. Rumors suggest NVIDIA will launch chips combining new ARM cores with Blackwell GPU architecture to target the Windows on ARM market.

ARM is shifting its business model from charging based on chip value to charging based on end-device value, showing signs of a SaaS transition. However, note that ARM’s YTD gains have exceeded 100%, and recent stock prices touched the previous high of $152. Whether it can break through further remains uncertain.

Three Investment Paths for NVIDIA Concept Stocks

For Taiwanese investors, there are mainly three ways to participate in NVIDIA concept stocks:

Direct stock purchase
Advantages: Directly participate in company growth, enjoy dividends.
Risks: Requires higher initial capital, fully exposed to individual stock volatility.

ETF allocation
Advantages: Diversifies portfolio, reduces impact of single stock fluctuations.
Risks: NVIDIA’s outperformance may be diluted.

Derivative trading
Advantages: No need to hold actual shares, leverage amplifies investment effects, supports two-way trading.
Risks: High leverage means potential for amplified losses.

Investors can choose the appropriate method based on their risk tolerance and investment horizon. Long-term holders are suitable for direct purchase; those seeking stability may prefer ETFs; advanced traders can consider derivatives opportunities.

Core Considerations for Investing in NVIDIA Concept Stocks Since 2023

NVIDIA concept stocks have performed remarkably over the past year, but investors must recognize a reality — many concept stocks have already experienced significant gains, and whether their future performance can sustain high valuations remains to be seen.

Second, the supply chain competitive landscape is not static. As NVIDIA’s business scope expands, more companies will be integrated into its ecosystem, and new entrants will bring potential competition. Investors need to monitor these changes dynamically and adjust their positions accordingly.

However, from a long-term perspective, AI revolution has just begun, and the market demand for NVIDIA’s GPU products remains far from saturated. New AI applications like Sora’s text-to-video technology will further boost market demand. Therefore, concept stocks in Taiwan with solid earnings growth fundamentals are still worth continuous attention from investors in the medium to long term.