Following a robust quarterly performance from Taiwan Semiconductor Manufacturing Co. (TSMC), semiconductor stocks experienced a notable uptick. TSMC’s recent report, combined with fresh AI partnership announcements, has created a wave of optimism within the sector.
TSMC’s Strong Q3 Performance
In its third-quarter results, TSMC reported an impressive revenue increase of 30.3% year-over-year, reaching NT$989.9 billion or approximately $33.1 billion in U.S. dollars. This figure surpassed analysts’ expectations of $32.12 billion. The company’s net income also soared by 39% to NT$452.3 billion.
- 3-Nanometer Chips: Constituted 23% of wafer sales.
- Advanced Nodes: Generated 74% of total revenue from nodes of 7 nm and below.
Looking ahead, TSMC improved its revenue growth projections for 2025 to the mid-30% range, raising it from around 30%. Capital expenditures are expected to reach up to $42 billion for the current year.
Q4 Revenue Forecast
For the fourth quarter, TSMC anticipates revenue between $32.2 billion and $33.4 billion. The gross margins are projected to range from 59% to 61%, buoyed by steady demand for AI chips.
Industry Analysts’ Insights
Several analysts believe TSMC’s promising outlook underscores robust demand for AI infrastructure amid broader economic uncertainties. Morgan Stanley noted that the semiconductor sector is entering a significant “new phase of AI-driven capital spending.” Similarly, Wedbush emphasized that TSMC’s results affirm ongoing investments in advanced semiconductor technologies.
New AI Partnerships Boost Stock Performance
The market sentiment was further lifted by announcements of new AI collaborations. Notably, Nvidia saw an increase in its stock price following reports of Microsoft and Oracle’s plans to deploy numerous Nvidia GPUs to support enterprise AI systems in the coming year.
- Broadcom: Experienced gains due to sustained demand for its AI networking chips.
- Micron: Gained optimism regarding its high-bandwidth memory products, which are expected to see improved pricing in 2025.
Wall Street Recommendations
Analysts at UBS and Citi have raised their price targets, reaffirming Buy ratings for Micron, indicating a favorable outlook due to an anticipated global shortage of DRAM chips.
Comparative Stock Analysis
Among Nvidia, Broadcom, Micron, and TSMC, all hold Strong Buy ratings from Wall Street analysts. Nvidia is seen as having the greatest upside potential of around 23%, while Broadcom follows with approximately 11%. TSMC is expected to rise by nearly 10%, while Micron’s anticipated growth stands at around 4%.
| Company | Upside Potential | Analyst Rating |
|---|---|---|
| Nvidia | 23% | Strong Buy |
| Broadcom | 11% | Strong Buy |
| TSMC | 10% | Strong Buy |
| Micron | 4% | Strong Buy |
This positive sentiment reflects strong analyst confidence and highlights the ongoing momentum in the semiconductor sector, driven by advancements in AI technology and strategic partnerships.
