2024 GPU Concept Stock Investment Guide: Which Stocks Are Worth Investing In?

Chip Giants Drive Investment Boom Across the Entire Industry Chain

Entering the second half of 2024, NVIDIA (NVDA) stock has experienced intense volatility. In mid-June, the company’s market capitalization soared to a peak of $3.34 trillion, once surpassing Apple and Microsoft to become the world’s largest by market value. However, this was followed by a sharp correction, with the stock price dropping over 20% by the end of June, marking the worst monthly performance since September 2022, and nearly $800 billion in market value evaporated within half a month.

Nevertheless, market resilience remains strong. After hitting bottom in early August, NVIDIA’s stock resumed its upward trend. By mid-October, the cumulative increase had reached 25%, with the stock price regaining the $134.80 level, just a step away from the June high of $135.58. Behind this rebound, GPU concept stocks have performed remarkably well.

Taiwan, as a global hub for chip manufacturing and foundry services, benefits most directly. Global leading chip manufacturer TSMC (2330.TW) reported record September revenue of NT$251.87 billion, a year-on-year increase of 39.6%, and announced that its Kaohsiung plant will mass-produce the world’s most advanced 2nm process chips by 2025. Semiconductor testing and packaging giant ASE Technology Holding (3711.TW) also posted nearly 11-month high revenue of NT$55.579 billion during the same period. The impressive results of these upstream suppliers directly reflect the explosive growth in NVIDIA’s orders.

The Essence of GPU Concept Stocks: Beneficiaries of the Supply Chain Ecosystem

“NVIDIA concept stocks” refer to listed companies with direct or indirect business ties to NVIDIA. Since NVIDIA is a fabless company—focused solely on designing and developing GPUs and related products, outsourcing manufacturing entirely—this business model opens huge opportunities for Taiwanese companies.

In Taiwan’s stock market, there are companies responsible for chip foundry like TSMC, as well as those providing GPU packaging and testing services such as ASE and KYEC (2449.TW), along with AI server manufacturers like Quanta (2382.TW) and GIGABYTE (2376.TW). These companies’ businesses are closely linked to NVIDIA, thus categorized as GPU concept stocks.

The investment logic in GPU concept stocks is that NVIDIA’s leadership in artificial intelligence, cloud computing, and autonomous driving continues to drive upgrades across the entire industry chain. As NVIDIA’s technology applications expand, hardware manufacturers, software developers, and service providers within the supply chain will all encounter growth opportunities.

Overview of GPU Concept Stocks in Taiwan: Who Deserves the Most Attention?

Major GPU concept stocks in Taiwan include:

Meanwhile, ARM, AMD, Qualcomm, and other companies listed in the US market are also important GPU concept targets.

Analysis and Investment Outlook for Individual Stocks

TSMC - Industry Core Hub

TSMC is NVIDIA’s primary foundry partner. Recent data shows that its high-performance computing (HPC) revenue now accounts for 52%, surpassing smartphone business (33%) to become the largest segment. As major tech companies increase AI infrastructure investments, this proportion is expected to continue rising.

From a valuation perspective, the 2024 P/E ratio is about 28x, expected to decline to around 22x in 2025. Given the company’s consistent outperformance over the past 20 quarters and its absolute leadership in chip manufacturing, current valuation appears attractive. In the short term, the October earnings briefing is expected to announce Q4 outlook, with market consensus expecting double-digit growth, supporting the stock price. Technically, the stock shows a bullish pattern with ample short-term upward momentum.

ASE Technology Holding (3711) - Long-term Potential Stock

As the world’s largest semiconductor packaging and testing service provider, ASE supplies advanced packaging services for NVIDIA GPUs, with gross margins of 20-30%. Although short-term stock performance is stable, the company is actively expanding. Recent acquisitions of Infineon’s testing facilities in the Philippines and Korea further strengthen its automotive and industrial control segments.

New plant construction is also underway; the Kaohsiung K28 plant has completed groundbreaking, reflecting management’s confidence in long-term performance. However, current stock prices are in a state of technical confusion, with multiple moving averages crossing, indicating market uncertainty. Short-term investors should remain cautious, but long-term prospects in the semiconductor recovery environment are promising.

KYEC (2449) - High-Growth Target

KYEC possesses advanced GPU testing capabilities and controls over 50% of FPGA chip testing capacity. Since GPU, FPGA, and high-speed Ethernet are key components in AI computing, the company’s testing business is expected to grow explosively. Notably, its capital expenditure in 2024 has been raised from NT$5.314 billion to NT$13.828 billion, reflecting strong confidence in future growth.

GIGABYTE (2376) - AI Server Pioneer

GIGABYTE’s subsidiary, GIGABYTE Server, is a certified NVIDIA supplier, offering HGX and PCIe server products. Its server business share jumped from 21% in 2023 to 50% in Q1 2024, surpassing 60% in Q2. With strong orders for NVIDIA’s H100/H200 models, and upcoming B200A and GB200, revenue is expected to further accelerate next year.

MediaTek (2454) - New Domain Explorer

MediaTek has partnered with NVIDIA on automotive AI chips, with the first product targeting smart cockpits, expected to launch in 2025 and contribute revenue from 2026. Rumors also suggest joint development of AI chips for PC platforms, with design finalized and mass production expected in late 2025. Success could break AMD and Intel’s dominance in x86 architecture.

ARM (US Stock) - Technology Partner

NVIDIA’s planned $40 billion acquisition of ARM was ultimately blocked, but ARM remains a key holding for NVIDIA, with a stake valued at about $147 million, accounting for over 60% of NVIDIA’s investment portfolio. Market rumors indicate NVIDIA is preparing to launch chips combining ARM cores with Blackwell GPU architecture to enter the Windows on ARM market. Additionally, ARM is reportedly developing standalone PC GPUs in Israel.

Recently, ARM adjusted its sales strategy from charging based on chip value to charging based on device value using its designs, reflecting a shift toward SaaS business models, which is beneficial for long-term revenue stability and growth. Given ARM’s dominance in mobile processors and its AI data center layout, its long-term investment value remains solid. However, with YTD gains exceeding 100% and the stock surpassing the previous high of $152, short-term observation is needed to see if it can break through effectively.

Cold Reflection on Investing in GPU Concept Stocks

Although GPU concept stocks have performed well in recent years, investors should be cautious of several risks. First, many stocks have already experienced significant gains, and whether future earnings can support high valuations remains to be seen. Second, not all supply chain companies are indispensable to NVIDIA. As NVIDIA expands its business scope, more new companies will be integrated into the supply chain, bringing potential competitive pressures.

From a long-term perspective, the industry transformation driven by artificial intelligence is just beginning. Currently, NVIDIA’s GPU supply is far from saturated, and the launch of AI models like Sora for text-to-video will further boost demand for related products. Therefore, GPU concept stocks in Taiwan have solid fundamentals for performance growth. Investors should continue to monitor industry dynamics and adjust their strategies accordingly to seize this wave of technological transition.