September is historically not a great month for the stock market, with the S&P 500 having an average decline of 0.6% during the month since 1950, according to research from The Motley Fool. Long-term investors know that jumping in and out of the market, especially on a monthly basis, isn't a smart move, and it really wouldn't have paid off if you were invested in some of the world's leading technology stocks in September.
That's because some of the most important tech stocks continued to benefit from the expanding artificial intelligence market, with Taiwan Semiconductor Manufacturing (TSM 1.41%), Broadcom (AVGO +0.74%), and Nvidia (NVDA 2.19%) all making significant gains during the month. Here's why these tech stocks defied the September slump.
Image source: Taiwan Semiconductor.
1. Taiwan Semiconductor: Up 21% in September
Taiwan Semiconductor, also referred to as TSMC, is the leading manufacturer of advanced processors, with an estimated 90% of the global market. TSMC is benefiting from the massive increase in semiconductor demand for AI data centers lately, and in September the company reported impressive year-over-year August sales growth.
Early in the month, TSMC reported that its August sales increased by nearly 34% from the year-ago month to about $11.1 billion. Investors were happy with those results and pushed the stock up by a staggering 20% in the month -- and more good news was on the way.
TSMC reported its third-quarter results in early October, with sales rising 31% and earnings per share increasing 39% to $2.92 per American depositary receipt (ADR).
NYSE: TSM
Key Data Points
2. Broadcom: Up 11% in September
Broadcom's stock began rising in early September after the company reported better-than-expected Q3 results. The company's sales rose 22% to $15.9 billion, outpacing Wall Street's consensus estimate of $15.8 billion. Adjusted earnings per share of $1.69 also beat analysts' expectations of $1.65.
Broadcom designs application-specific integrated circuits (ASICs) that are used in artificial intelligence and cloud computing, and investors took note of the company's continued ability to benefit from AI's growth.
Broadcom's shares also began climbing on speculation that the company's mystery $10 billion customer was OpenAI.Management later clarified OpenAI isn't the company's $10 billion customer. But OpenAI and Broadcom did announce in October that they're partnering to build AI data centers in a deal that could be worth billions of dollars in sales for the company, per The Wall Street Journal.
NASDAQ: AVGO
Key Data Points
3. Nvidia: Up 7% in September
Nvidia's stock began climbing in mid-September after the company announced a collaboration with Intel, in which Intel will design and manufacture custom data center CPUs that work with Nvidia's hardware architecture. Nvidia is investing $5 billion in Intel as part of the partnership.
The collaboration was an indication to investors that Nvidia is expanding its market beyond GPUs and working with other chip companies to further its architecture ecosystem.
NASDAQ: NVDA
Key Data Points
Then, a few days later, Nvidia announced that it was investing up to $100 billion to help OpenAI build new data centers that will have millions of Nvidia GPUs. That news helped the company's shares rise further, although it's worth pointing out that it's unclear how much Nvidia stands to gain monetarily from the partnership. While OpenAI will use Nvidia's processors for the data centers, Nvidia is investing a large amount that could offset potential revenue from the collaboration.
There's no guarantee that these AI stocks will continue climbing higher, but all of them are benefiting from their leading positions in artificial intelligence, and there's no indication right now that their growth is slowing down.
