Taiwan Semiconductor CEO Announces Major Boost for Nvidia Stock Investors

Taiwan Semiconductor Manufacturing Company (TSMC) recently revealed impressive quarterly results that highlight the ongoing growth of the artificial intelligence (AI) market. This report is particularly significant for Nvidia investors, as it provides clear indications of continued demand for AI technologies.

TSMC’s Record-Breaking Revenue

In the third quarter, TSMC generated NT$989.9 billion (approximately $33.1 billion). This marks a 30% increase year-over-year, translating to a remarkable 41% increase when measured in U.S. dollars. The earnings per share (EPS) rose to NT$17.44 (or $2.92 per American Depositary Receipt), reflecting a 39% year-over-year increase.

Strong Demand for AI Chips

These results outperformed Wall Street analysts’ expectations, which anticipated revenues around $32 billion and an EPS of $1.95. TSMC’s Chief Financial Officer, Wendell Huang, attributed the profitability increase in part to cost improvements and, significantly, to “strong demand for our leading-edge process technologies,” primarily driven by AI-related requirements.

• High-performance computing (HPC) revenue, encompassing AI chips, surged by 57% year-over-year.
• Smartphone processor revenue saw a 30% increase.

Positive Outlook for TSMC

Looking ahead, TSMC has adjusted its forecast for the fourth quarter, now anticipating revenue of approximately $32.8 billion, which marks a 24% increase compared to the prior year. This upward adjustment further emphasizes the robust demand for AI technology.

Implications for Nvidia’s Market Position

These results have significant implications for Nvidia, which holds a commanding 92% share of the data center GPU market. With AI adoption ramping up, Nvidia is poised to benefit from increasing data center spending, projected to reach between $3 trillion and $4 trillion by 2030.

Although some investors have expressed concerns about a potential slowdown in AI adoption, TSMC’s results indicate that demand remains strong. Nvidia’s stock has already risen over 1,140% since the beginning of 2023, reinforcing its position as a leader in the AI sector.

Conclusion

As AI technology continues to advance and permeate various sectors, Nvidia stands to gain significantly from the increasing demand for its GPUs. With a competitive market valuation of 28 times next year’s expected earnings and anticipated revenue growth of 26% annually over the next five years, Nvidia continues to attract investor interest.