Nasdaq futures climb as TSMC forecast steers chip stocks recovery.

By Lisa Pauline Mattackal and Ankika Biswas

(Reuters) -Nasdaq futures rose on Thursday, thanks to an upbeat forecast from Taiwan Semiconductor Manufacturing that lifted chip stocks and a rebound in megacaps following a sharp sell-off in the previous session.

U.S.-listed shares of TSMC rose 1.5% in premarket trading after the world’s largest contract chipmaker raised its full-year revenue forecast on surging demand for AI chips.

Apple (NASDAQ: AAPL) and Nvidia (NASDAQ: NVDA), both TSMC customers, climbed 0.6% and 2.5%, respectively. Other chipmakers including Advanced Micro Devices (NASDAQ: AMD), Intel (NASDAQ: INTC), Marvell Technology (O: MRVL) and Arm Holdings (NASDAQ: ARM) rose over 1% each.

Barring Intel, chip stocks lost over $500 billion in market value in Wednesday’s session following a report that the U.S. was mulling tighter curbs on exports of advanced semiconductor technology to China. Comments on Taiwan from Republican presidential candidate Donald Trump also droves losses.

The Philadelphia SE Semiconductor index logged its worst day in four years on Wednesday. The rout in chip stocks also pressured megacap shares.

The group of so-called “Magnificent 7” stocks rose, with Meta Platforms (NASDAQ: META), Tesla (NASDAQ: TSLA) and Amazon.com (NASDAQ: AMZN)

The quarterly earnings season that is underway will be a significant test for whether expensively valued megacaps can keep investors satisfied with strong results.

“While the strong year-to-date performance of the tech sector creates the risk of near-term volatility, we continue to think it is important that investors hold sufficient long-term exposure to the AI trend,” said Mark Haefele, chief investment officer, UBS Global Wealth Management.

“Beating on profit may no longer be enough to propel strong rallies, given the high bar set for the tech sector, which already has rich valuations.”