Taiwan Semiconductor Reports Slower October Sales; AI Demand Remains Strong
Taiwan Semiconductor Manufacturing Company (TSMC) has announced its financial performance for October, revealing sales of NT$367.47 billion, equivalent to $11.9 billion. This figure represents a 16.9% increase compared to the same period last year, although it marks the slowest growth since February 2024. Industry experts are questioning whether the previously high demand for AI chips is beginning to wane.
AI Demand Remains Strong Amid Slower Growth
In a month-to-month comparison, TSMC experienced an approximately 11% rise in sales. This indicates a sustained demand for AI and high-performance chips, despite the eased growth rate. TSMC’s shares have increased nearly 37% in the current year, largely due to steady orders from major client Nvidia.
Market Context and Investor Sentiment
These results come as tech stocks in Asia face a downturn. Some investors, including notable figures such as Michael Burry from “The Big Short,” have cautioned that the surge in semiconductor stocks may soon encounter corrections. Despite these concerns, analysts maintain a positive outlook for TSMC’s long-term prospects.
Future Investments in AI
TSMC continues to hold a leading position in advanced chip manufacturing, benefitting from escalating investments in AI technologies. Major companies like Meta, Alphabet, Amazon, and Microsoft plan to invest over $400 billion in AI infrastructure next year. This planned investment represents a 21% increase from anticipated spending levels in 2025. Such commitments are expected to drive consistent demand for TSMC’s cutting-edge 3-nanometer and 2-nanometer chips used in AI systems and data centers.
Wall Street Analysis of TSMC
Currently, TSMC is viewed favorably on Wall Street, holding a Strong Buy consensus rating. This rating is based on eight Buy recommendations and one Hold from analysts over the past three months. With an average price target of $340.75 for TSMC, analysts suggest there is an upside potential of approximately 18.94% for investors.
- October Sales: NT$367.47 billion ($11.9 billion)
- Year-Over-Year Growth: 16.9%
- Monthly Sales Growth: Approximately 11%
- TSMC Share Increase in 2023: Around 37%
- Expected AI Investments from Major Firms: Over $400 billion
In conclusion, while TSMC has reported slower sales growth, the demand for AI chips remains robust. The company’s position and future prospects continue to resonate positively with investors and analysts alike.
