Opportunities in Taiwan Stocks Amid the AI Chips Wave: A Complete Analysis of Graphics Card Concept Stocks and NVIDIA Supply Chain

The AI Boom Drives Investment Opportunities in the Semiconductor Sector

Since entering 2024, global tech stocks have experienced a new rally, with AI-related industries becoming the market’s focus. As the core equipment provider for AI computing, NVIDIA’s every move influences the entire industry chain. From its stock reaching an all-time high in the first half of the year, to mid-year corrections, and recent rebounds, NVIDIA’s performance has been quite volatile.

According to market data, NVIDIA’s stock reached a peak market cap of $3.34 trillion USD on June 18 (US time), briefly surpassing Apple and Microsoft to become the world’s most valuable publicly traded company. However, this was followed by a decline of over 20% within a month, erasing nearly $800 billion USD in market value. Nonetheless, market enthusiasm remained undampened. After hitting a bottom and rebounding in late August, NVIDIA’s stock rose 25% in a month, with the latest price back to $134.80, just one step away from its all-time high.

What Are NVIDIA Concept Stocks and Graphics Card Concept Stocks?

NVIDIA’s ability to influence the entire industry stems from its unique business model. As a fabless semiconductor company, NVIDIA focuses solely on designing GPUs and related chips, outsourcing manufacturing entirely to third-party foundries. This division of labor allows NVIDIA to concentrate on technological innovation while transferring production responsibilities to contract manufacturers, packaging, testing, and upstream suppliers.

As a result, a large ecosystem has formed in NVIDIA’s upstream industry chain. These companies’ businesses are closely linked to NVIDIA’s development, providing chip manufacturing, packaging, testing, and server components. Since their operational performance is highly correlated with NVIDIA’s order volume, the market collectively refers to them as “NVIDIA concept stocks.” Among these, companies that produce graphics card-related products and offer testing and assembly services for graphics cards are widely recognized as “graphics card concept stocks,” because NVIDIA’s GPU products are essentially the core of high-performance graphics cards.

The investment logic in NVIDIA concept stocks is: as AI, deep learning, cloud computing, and autonomous driving industries flourish, NVIDIA, as a technological leader in these fields, will see continuous growth in product demand. These concept stocks, as NVIDIA’s suppliers, will directly benefit from increased orders, leading to revenue and profit growth.

Overview of NVIDIA Concept Stocks in Taiwan and the US Markets

In Taiwan’s capital market, many listed companies have direct or indirect business dealings with NVIDIA. Here is an overview of representative, larger-cap NVIDIA concept stocks:

Taiwan NVIDIA Concept Stocks

Taiwan Semiconductor Manufacturing Company (2330), the world’s largest chip foundry, is one of NVIDIA’s most important partners. In September 2024, TSMC announced revenue of NT$251.87 billion, up 39.6% year-over-year, setting a record high. High-performance computing (HPC) accounts for 52% of revenue, surpassing smartphone business, becoming the main growth driver. TSMC’s latest stock price closed at NT$1,055.

ASE Technology Holding (3711), a leading global provider of semiconductor packaging and testing services, supplies advanced CoWoS and InFO packaging technologies for NVIDIA GPUs. In September, its revenue reached NT$55.579 billion, the highest in nearly 11 months. Its stock closed at NT$158.

Wistron (3231), focused on AI server and GPU substrate production, is a main supplier for NVIDIA’s DGX and HGX servers. NVIDIA CEO Jensen Huang has explicitly stated that the upcoming supercomputer will be supplied by Wistron, laying a foundation for future performance growth.

Quanta Computer (2382) dominates in AI server production, collaborating with NVIDIA on HGX and PCIe server motherboards, rack assembly, and more. The September operational report shows AI server revenue accounts for over 70%.

Vanguard Electronics (2449) provides testing services for GPU and FPGA chips, controlling over 50% of the global FPGA chip testing capacity. Its 2024 capital expenditure has been increased to NT$13.828 billion, indicating confidence in future growth.

GIGABYTE (2376) subsidiary GIGABYTE Technology supplies rack and server products for NVIDIA-certified components, with server business revenue rapidly increasing from 21% in 2023 to over 60% in Q2 2024.

MediaTek (2454) has begun cooperation with NVIDIA in automotive AI chips, with the first chip expected in 2025 and revenue contribution starting in 2026. They are also jointly developing PC AI chips, with mass production expected in late 2025.

NVIDIA Concept Stocks in the US Market

In the US, Arm Holdings (ARM), a chip architecture designer, is increasingly important in NVIDIA collaborations. NVIDIA plans to launch chips combining new ARM cores with Blackwell GPU architecture to enter the Windows on ARM market. ARM’s latest stock price is $151.46, with a YTD increase of over 100%.

AMD (AMD), a key competitor in CPU and GPU markets, also benefits from the AI wave. Its latest stock price is $167.89, with a YTD increase of 21.15%.

Qualcomm (QCOM) has clear advantages in mobile processors and wireless communication chips, and is also expanding into AI chips. Its latest stock price is $169.98.

Tech giants like Microsoft (MSFT), Google (GOOGL), Amazon (AMZN), and Facebook (META), as major customers of NVIDIA’s GPU products, are considered important components of NVIDIA concept stocks. Their development of AI applications and cloud infrastructure creates huge demand for NVIDIA GPUs.

Apple (AAPL), although mainly developing its own chips, is increasing investments in AI, indirectly benefiting from the overall AI industry development.

Investment Outlook for NVIDIA Concept Stocks

The prospects of these stocks are closely related to NVIDIA’s business share and strategic positioning. Based on the latest data, here is an assessment of several key companies:

TSMC: The Absolute Leader in High-Performance Computing

TSMC has the deepest cooperation with NVIDIA, with multiple advanced process fabs dedicated to AI chip foundry services. HPC has become a major revenue pillar, and as tech giants continue investing in AI infrastructure, this segment is expected to maintain strong growth.

From a valuation perspective, TSMC’s 2024 P/E ratio is about 28x, expected to decline to around 22x in 2025. Given its stable profit growth and market leadership, this valuation is attractive. Over the past 20 quarters, TSMC has consistently exceeded market expectations, demonstrating excellent operational efficiency. In the short term, attention is on the upcoming earnings conference, where the company is expected to release outlooks for Q4 and 2025. Technically, TSMC’s stock shows a bullish pattern with sufficient short-term upward momentum.

ASE Technology Holding: Packaging & Testing Leader’s Turning Point

Despite a 13% revenue decline in 2023, mainly due to softness in communications and mobile markets, the advent of AI has increased the importance of ASE’s advanced CoWoS and InFO packaging technologies. In the first half, gross margin reached 16.1%, and for NVIDIA’s advanced packaging orders, gross margins can reach 20-30%, meaning increased NVIDIA orders will effectively boost overall profitability.

Recently, ASE has expanded capacity through acquisitions in the Philippines and Korea, and launched a new plant in Kaohsiung (K28), reflecting management’s confidence in long-term growth. However, in the short term, its stock lacks clear direction amid multiple moving averages, requiring cautious observation.

GIGABYTE Technology: Scarce Testing Resources

GIGABYTE controls over 50% of global FPGA testing capacity and has advanced GPU testing platforms. As AI computing requires GPU, FPGA, and high-speed Ethernet components working together, GIGABYTE is uniquely positioned. Its capital expenditure has surged to NT$13.828 billion, indicating potential explosive growth.

Wistron, Quanta, and GIGABYTE: Beneficiaries of Server Manufacturing

These companies excel in AI server production and component manufacturing. As NVIDIA’s server product lines expand (including H100, H200, and next-gen B200A, GB200), their order volumes continue to grow, with impressive performance. Notably, GIGABYTE’s server business has rapidly increased from 21% in 2023 to over 60% in Q2 2024.

MediaTek: Pioneering New Fields

MediaTek’s cooperation with NVIDIA in automotive AI and PC AI chips is in early stages but holds great potential. Success could challenge the dominance of x86 architectures led by AMD and Intel, opening new revenue streams for MediaTek.

How to Choose the Right Investment Approach

For investors interested in NVIDIA concept stocks, there are three common investment channels:

Direct Stock Purchase is the traditional method, requiring opening accounts with domestic brokers to buy Taiwan stocks or US stocks directly. This approach allows participation in company growth and dividend income but requires higher initial capital and bears risks from individual stock volatility.

Exchange-Traded Funds (ETFs) offer diversified investment options, many of which include NVIDIA and other tech stocks. Suitable for those seeking risk diversification and reduced impact from single-stock fluctuations. However, since they involve multiple companies, the stellar performance of NVIDIA may be diluted in the overall portfolio.

Contracts for Difference (CFDs) are more flexible derivatives, allowing leverage to amplify investment effects without owning the actual stocks. They also enable short-selling to profit from declines. However, high leverage entails greater potential losses, suitable for experienced traders.

Key Considerations and Summary for Investing in NVIDIA Concept Stocks

The overall rally of NVIDIA concept stocks has been substantial, and market enthusiasm for AI has peaked. Investors should be aware of several key risks:

First, whether high stock prices can be supported by actual performance remains to be seen. Many concept stocks have already risen several times, indicating the market has largely priced in expected growth. If actual earnings growth falls short, prices could correct downward.

Second, NVIDIA’s supply chain is not static. As NVIDIA’s business scales up, more new suppliers will enter, bringing potential competitive pressures. Investors need to stay updated on industry trends and adjust strategies accordingly.

Third, geopolitical risks and trade policy changes could impact these highly international supply chain-dependent companies.

However, from a long-term investment perspective, the industry transformation driven by AI has just begun. NVIDIA’s GPU products are still in high demand, with market demand far exceeding capacity. The launch of models like Sora for text-to-video conversion will further boost demand for high-performance computing equipment. Under this backdrop, related graphics card concept stocks and NVIDIA concept stocks in Taiwan still have solid growth fundamentals.

Investors should focus on industry developments, thoroughly research individual companies’ fundamentals, and carefully select stocks with sustained growth potential. Particularly, companies occupying unique positions in the supply chain, with high technical barriers and deep ties to NVIDIA, are worth long-term attention.