Major Asian semiconductor stocks and suppliers of Nvidia surged significantly on Thursday, following a strong market rally in Nvidia due to renewed optimism surrounding artificial intelligence (AI).

NVIDIA Corporation (NASDAQ: NVDA) reached a market valuation exceeding $3 trillion on Wednesday, surpassing Apple Inc (NASDAQ: AAPL) to become the second most valuable company on Wall Street, behind Microsoft Corporation (NASDAQ: MSFT).

The stock's rise was driven by increased optimism about AI demand, particularly after Nvidia introduced its latest line of AI chips earlier in the week. Investors are optimistic that the rapid growth in AI applications will drive higher semiconductor demand.

Sentiment towards semiconductor companies was further bolstered by positive reports from ASML Holding NV (AS: ASML). The semiconductor equipment manufacturer, considered a key indicator for the industry, indicated improving demand from its major customers, notably TSMC.

TSMC (TW: 2330) (NYSE: TSM) surged nearly 5% to a record high in Taiwan trading, leading gains among Asian semiconductor stocks. As the world's largest contract chipmaker and a significant supplier to Nvidia, TSMC benefited from the positive market sentiment.

Other suppliers to Nvidia, such as electronics manufacturer Hon Hai Precision Industry Co Ltd (TW: 2317), also known as Foxconn, saw modest gains.

Asian semiconductor stocks rallied broadly on expectations of increased demand. Semiconductor Manufacturing International Corp (HK: 0981), China's largest chipmaker, surged nearly 4% in Hong Kong trading.

Smaller peers like Will Semiconductor Co Ltd Shanghai (SS: 603501) and NAURA Technology Group Co Ltd (SZ: 002371) also saw slight gains in Shenzhen trading.

In Japan, Advantest Corp. (TYO: 6857), a semiconductor testing equipment maker, saw its stock rise by 5%, while Tokyo Electron Ltd. (TYO: 8035), Japan's most valuable chipmaker, gained 4.3%.

Other Japanese chipmakers, including Renesas Electronics Corp (TYO: 6723) and Disco Corp (TYO: 6146), saw their stocks rise between 3% and 5%.

Nvidia's sharp increase in valuation since 2023, fueled by the growing adoption of generative AI tools like OpenAI's ChatGPT, has spurred significant investor interest in the sector. This has particularly benefited Nvidia, known for producing some of the most advanced AI chips available.

The gains in Nvidia's stock have positively influenced the broader semiconductor sector, with investors betting on increased chip demand and technological investment driven by AI applications.

Paraphrasing text from "Investing" all rights reserved by the original author.