(Jan 26): MediaTek Inc shares notched their best two-day rally on record, as investors flock to the Taiwanese chip designer on excitement over its tie-up with Google.
The Taipei-listed stock jumped 8.6% on Monday, capping a two-session surge of 19% and closing at a fresh all-time high. That extended a two-month rally on growing awareness of MediaTek’s work on Google’s tensor processing units (TPUs), which are chips used in artificial intelligence (AI) applications.
It also highlights how fund managers faced with single-stock limits on their holding of market titan Taiwan Semiconductor Manufacturing Co (TSMC) are diversifying into other AI-related firms. MediaTek’s pivot from its core smartphone chip business into high-margin custom AI offerings has positioned it as a top alternative.
“We see large potential” in MediaTek’s AI application-specific integrated circuits, Morgan Stanley analysts including Charlie Chan wrote in a note last Friday. While Google is also working with Broadcom Inc on its TPUs, MediaTek may see more growth as it converts more of its smartphone-related resources to AI-related chips, they added.
MediaTek helped power Taiwan’s benchmark Taiex to a new record on Monday, along with other major tech names including chipmakers Nanya Technology Corp and United Microelectronics Corp. TSMC shares fell 0.9%.
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MediaTek’s latest guidance looks conservative, as it only factors in the outlook as of October and just orders from Google, according to Phelix Lee, an analyst at Morningstar Inc. The market may be hoping for the company to overshoot its targets, he said.
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