Bahh Gawd, Thank God… 

TSMC did it, you guys. In the wonderful and bi-polar world of chip stocks, Taiwan Semiconductor Manufacturing Company just mooned everyone with a mega mic drop on the earnings stage. In short, TSMC reported a seismic 54% jump in third-quarter profit, blowing past forecasts like it was nothing. The numbers? A cool T$325.3 billion (that’s about $10.1 billion in our U.S. of A currency), compared to the “meh” T$300.2 billion that analysts had expected. 

(Source: Reuters) 

Additionally, TSMC’s revenue for the quarter came in at a booming $23.5 billion. That’s up 36% year over year and ahead of the company’s guidance range of $22.4 billion to $23.2 billion. And all chip investors this week said, amen. 

(Source: Giphy) 

So why the big beat on the Street? Well, simple: Artificial Intelligence. AI this, AI that. AI is the generational avocado toast—except instead of overpriced brunches in your nearest University town (full of brainwashed Gen Z’s, especially where I live), AI is the gift that keeps on giving. Especially as Nvidia and Apple are among TSMC’s biggest customers, and loving those tiny, yet girthy new 3nm and 5nm chips the Taiwan giant has to offer. 

(Source: Giphy) 

For instance, TSMC CEO C.C. Wei put it best on the earnings call: “The demand is real, and I believe it’s just the beginning,” - this of course echoes what Nvidia’s kingpin Jensen Huang has been saying for months: AI is not a fad. It’s a gold rush. Meaning, if you thought that ASML’s premature earnings release was a sign of the AI bubble popping. Think again buddy. 

In fact, according to the report, TSMC expects its AI server processor revenue to triple this year, making up a "mid-teens" percentage of total sales in 2024. Translation: TSMC is going to be swimming in cash for the foreseeable future.

(Source: Giphy) 

Now of course, making all those AI chips doesn’t come cheap. TSMC is throwing down billions on new factories, including a jaw-dropping $65 billion investment in three Arizona plants. In addition, TSMC’s capital expenditure for 2025 is expected to rise even further, building factories in Japan, Germany, and wherever else AI and chips might collide.

And while they did spend $6.4 billion in capital expenditures in Q3 alone, it’s clear that the investments on chip growth are paying off. Especially as TSMC’s Taipei-listed shares have absolutely serenaded investors this year, up a whopping 85% year-to-date. Compare that to the broader market’s 28% gain, and you’ve got a stock that’s lapping the competition. 

(Source: Reuters) 

Which is why, not surprisingly, TSMC’s American depositary receipts (ADRs) jumped more than 8.52% in pre-market trading following the earnings drop - while dragging the rest of the tech sector up with it. Nvidia was up 3.09%, AMD added 2.61%, and even Intel managed to climb 1%. 

(Source: CNBC) 

Meaning, this just so happens to be the one piece of good news that numbs the pain of Tuesday’s market-wide bloodbath… at least for now, anyway. Why? Well, because looking ahead, TSMC is forecasting Q4 revenue between $26.1 billion and $26.9 billion, well above analysts’ expectations of $24.9 billion. And gross margins? TSMC expects them to top 57%, again beating consensus expectations of 54.7%. Long story short: TSMC is printing money, and it doesn’t look like it’ll be slowing down… not even a little. 

(Source: Giphy) 

On the other hand though, there are some risks to keep in mind going forward: Geopolitical tensions, particularly between the U.S. and China, could throw a massive wrench in things. And there’s also talk that the Biden administration might cap sales of advanced AI chips from Nvidia and others to certain countries. If that happens, it could put a dent in TSMC’s AI-driven revenue. 

However, as of right now, TSMC is simply cashin’ checks and snappin’ necks with its financials, and I, for one, including many others… are 100% here for it. So in the end, here’s to a popping pre-market this wonderful Thursday and hopes of the momentum continuing. As always, stay safe and stay frosty, friends! Until next time…

P.S. Can someone say 203% winner?! That’s right, yesterday's alert on $QNRX went nuclear and premium subscribers caught wind of this monster at $0.51 before it RIPPED to $1.56 in less than 4 hours! Click here now to make sure you’re in on the next one… don’t say I didn’t warn ya! 

Stocks.News holds positions in Apple as mentioned in the article.