Opportunities in the GPU Concept Stock Wave: How to Select Worth Buying Targets?

Investment Logic of GPU Concept Stocks from the Perspective of Leading AI Chip Companies

Since the second half of 2024, the artificial intelligence chip industry has entered a new development cycle. As a global leader in GPU design, NVIDIA('s stock price fluctuations directly impact the entire industry chain. From reaching a peak market value of $3.34 trillion in mid-June, to a 20% correction by the end of June, and then surging to a high of $134.80 in mid-October, NVIDIA’s market performance has become an important window into the health of the AI industry.

Following NVIDIA’s stock movements are a number of upstream and downstream companies related to it—these companies, collectively known as “GPU concept stocks,” are also beginning to show different investment opportunities.

What are GPU Concept Stocks? Why Are They Worth Attention?

As a “fabless” semiconductor company, NVIDIA focuses on the design and R&D of GPU chips, while manufacturing is outsourced to partners in Taiwan and other regions. This business model has given rise to a complete industry chain: chip foundry, packaging and testing, server assembly, infrastructure construction, and more, involving related enterprises.

These companies that are closely tied to NVIDIA’s business, directly or indirectly involved in GPU product manufacturing and services, are called GPU concept stocks. Their performance is often highly positively correlated with NVIDIA’s product shipments and market demand. As AI, cloud computing, autonomous driving, and other fields develop rapidly, NVIDIA’s demand continues to rise, providing sustained growth momentum for related concept stocks.

From an investment perspective, GPU concept stocks have threefold value:

First, industry trend-driven. Artificial intelligence has become the most core technological direction for the next decade. As essential hardware for AI computation, GPU demand has huge growth potential. Major tech giants are increasing their investments in AI infrastructure, directly boosting GPU and related product procurement.

Second, industry chain resonance. The explosive growth of NVIDIA’s single product often leads to a reevaluation of the entire supply chain’s valuation. For example, TSMC’s September revenue increased by 39.6% year-on-year, and ASE’s performance hit an 11-month high, both directly benefiting from increased NVIDIA orders.

Third, valuation repair opportunities. Compared to directly investing in NVIDIA)NVDA( itself, GPU concept stocks often have more attractive valuations and offer diversified choices.

Overview of GPU Concept Stocks in Taiwan: Who Are the Most Worth Watching?

Among listed Taiwanese companies, several are in key positions within NVIDIA’s supply chain. Based on the closeness of their business relationship with NVIDIA and market capitalization, the following categories are worth focusing on:

Chip Foundry Sector—TSMC)2330(

As the world’s largest foundry, TSMC has become the main manufacturer for NVIDIA’s GPU chips. Recent data shows that in 2024, its high-performance computing (HPC) revenue share has risen to 52%, surpassing its smartphone business)33%( for the first time, becoming the company’s largest revenue source.

What does this mean? TSMC’s business structure is shifting toward AI. In September, its consolidated revenue reached a record NT$251.873 billion, up 39.6% year-on-year. It is expected that as major tech companies continue to ramp up AI infrastructure, the share of HPC will further increase, supporting overall revenue growth.

Valuation-wise, TSMC’s 2024 P/E ratio is about 28 times, expected to fall to around 22 times in 2025. Such valuation levels are attractive for a stable profit-making tech giant with a leading market position. Notably, the company has consistently exceeded market expectations for the past 20 quarters, demonstrating stable operational efficiency and financial strength.

From technical analysis, TSMC’s current stock price is in a bullish pattern, with the 20-day moving average breaking above the 60-day moving average, indicating short-term upward momentum. The recent guidance conference expects double-digit growth in Q4, providing solid support for the stock price.

Packaging and Testing Sector—ASE)3711( and KYEC)2449(

ASE is a global leader in packaging and testing, providing advanced CoWoS, InFO, and other packaging services for high-end chips like NVIDIA GPUs. Despite a 13% revenue decline in 2023 due to weak communication and mobile markets, the company still holds industry-leading advanced packaging technology.

In September, revenue reached NT$55.579 billion, a near 11-month high, and the company announced acquisitions of Infineon’s packaging and testing factories in the Philippines and Korea, further consolidating its position in automotive and industrial control fields. The new factory in Kuo-Kang K28 has also started construction, reflecting management’s confidence in long-term growth.

However, in the short term, ASE’s stock price has been weak amid chaotic crossovers of multiple moving averages, with market divergence evident. Investors should exercise caution and wait for clearer signals before entering.

KYEC, with its leading position in GPU testing and over 50% FPGA testing capacity, as well as support for high-speed network testing platforms, shows strong growth potential. The company’s capital expenditure in 2024 has been raised to NT$13.828 billion, a 160% increase from NT$5.314 billion at the start of the year, fully reflecting expectations for future performance growth.

Server and Motherboard Sector—Quanta)2382( and GIGABYTE)2376(

Quanta is a main supplier for NVIDIA’s HGX and PCIe servers, responsible for core components such as motherboards, racks, and server assembly. The September operational report shows that AI server revenue now accounts for over 70% of non-PC products, while the PC business impact continues to decline.

As NVIDIA’s AI server shipments continue to grow, Quanta’s performance is expected to further improve. GIGABYTE’s subsidiary Giga-Byte Technology is an NVIDIA-certified supplier, providing racks and servers for HGX and PCIe series. Server business revenue has rapidly increased from 21% in 2023 to over 60% in Q2 2024, with strong sales of H100/H200 orders, and upcoming B200A and GB200 products are in the pipeline.

Other Key Stocks—Wistron)3231( and MediaTek)2454(

Wistron is a major supplier for NVIDIA’s DGX and HGX servers, also responsible for GPU substrate production. Jensen Huang has explicitly stated that the next-generation supercomputers will prioritize Wistron supplies, laying a foundation for future growth.

MediaTek is collaborating with NVIDIA in the automotive AI chip field. The first automotive cockpit AI chip is expected to launch in 2025, contributing revenue from 2026. Additionally, the two companies are jointly developing PC-side AI chips, with design finalized and mass production scheduled for the second half of 2025, potentially challenging AMD and Intel’s x86 dominance.

US Stock GPU Concept Stocks: Choices in the Global Perspective

Beyond Taiwan stocks, the US market also offers high-quality GPU concept stocks:

Arm Holdings)ARM( — NVIDIA once planned to acquire ARM for $40 billion, but the deal fell through. Nonetheless, ARM remains a key holding for NVIDIA, with a market value of about $1.47 billion. Industry rumors suggest NVIDIA is preparing to launch chips combining next-generation ARM architecture with Blackwell GPUs to enter the Windows on Arm ecosystem. ARM’s latest stock price is $152, with a YTD increase of over 100%. Caution is advised for short-term high-level corrections.

AMD)AMD( — As a CPU and GPU supplier, AMD benefits from the growth in AI chip demand. Its YTD increase is 21.15%, with the latest stock price at $167.89.

Qualcomm)QCOM( — Its layout in AI chips and 5G makes it a participant in the GPU industry chain, with a YTD increase of 21.22%, and a stock price of $169.98.

Major Tech Giants — Microsoft, Google, Amazon, Meta, and other internet giants are heavily investing in AI infrastructure, purchasing large quantities of GPU chips and developing related products in-house. Their performance growth directly benefits from the AI wave, making them indirect GPU concept stocks.

How to Scientifically Select GPU Concept Stocks?

Investors should focus on the following key indicators when choosing stocks:

Business linkage with NVIDIA — The closer, the better. Companies supplying key components or services directly to NVIDIA tend to have greater growth potential.

Capacity expansion plans — Significant increases in capital expenditure often indicate optimistic expectations for future demand. The capacity expansions of Giga-Byte and ASE are important signals.

Market share and competitive position — Companies leading in their respective fields are more likely to share NVIDIA’s growth dividends and face lower risks.

Valuation levels — Some GPU concept stocks have already experienced substantial gains and are highly valued. Investors need to assess whether current prices fully reflect growth prospects.

Diversified revenue streams — While tied to NVIDIA, companies with other business sources have higher risk resilience.

Comparing Three Ways to Invest in GPU Concept Stocks

Depending on different investment needs and risk preferences, investors can choose among three main approaches:

Method 1: Direct Stock Purchase

• Advantages: Direct participation in company growth, dividend income, comprehensive understanding of company dynamics
• Risks: Requires higher initial capital, fully exposed to single stock volatility

Method 2: ETF Investment

• Advantages: Diversification across a basket of stocks, easier management, lower fees
• Risks: Performance of individual high-quality companies may be diluted, less precise opportunity capture

Method 3: CFD Trading)CFD(

• Advantages: No need to own actual shares, leverage can amplify gains, supports short selling, flexible market response
• Risks: High leverage can magnify losses, requires strong risk management

Each method has its characteristics; long-term investors may prefer direct stock buying, risk-averse investors may choose ETFs, and advanced traders can explore CFD flexibility.

Risks and Investment Advice for GPU Concept Stocks

It is important to note that many GPU concept stocks have already experienced significant gains. For example, GIGABYTE, Giga-Byte, and Quanta have all seen YTD increases exceeding 25%, with some approaching 50%. This indicates market expectations are quite optimistic, and whether they can continue to outperform remains uncertain.

Another risk is increased competition within the supply chain. As NVIDIA’s orders grow, more companies will enter the supply chain, posing substitution risks for existing partners. Dynamic changes in industry structure require close attention from investors.

However, in the long run, the AI wave has just begun. The launch of generative AI models like Sora further stimulates GPU demand, and NVIDIA’s current capacity remains under supply. This means related industry chain companies have solid fundamentals for performance growth.

Investment Suggestions:

• Long-term investors should focus on solid fundamentals and clear competitive positions, such as TSMC and Quanta
• Short-term traders should wait for technical confirmation and be cautious of high-level corrections
• Regularly monitor industry trends and company financial reports, adjusting holdings timely
• Moderate diversification to avoid concentration risk

The golden period of GPU concept stocks continues, but mature investors need to stay rational amid excitement, balancing pursuit of the trend with risk management.