The only source of the most cutting-edge processors for Nvidia Corp. as well as Apple Inc., Taiwan Semiconductor Manufacturing Company (TSMC) announced an impressive NT$207.9 billion ($6.4 billion) in revenue for June. With an astounding amount, the June quarter had a 40 percent growth, reaching NT$673.5 billion, over the average estimate of a 35.5 percent increase.
Taking the AI Wave by Storm
Image Source: bnnbloomberg.ca
This spike in sales comes after TSMC’s $1 trillion market valuation was momentarily attained due to significant investments in data centres and devices connected to artificial intelligence (AI). Companies all over the world are scrambling to get hardware, such as Nvidia chips, to support their AI infrastructure. Wall Street brokerages have raised their price forecasts for TSMC in response to the increasing demand, presumably because they expect price increases in 2025 that would further boost earnings.
The slow sales of smartphones, which are just now starting to pick up steam, have been offset by the orders for artificial intelligence (AI) chips. The fact that Apple continues to be TSMC’s biggest client shows how important the business is to the tech giant’s entire supply chain.
Effect on the Index Taiex
Despite continuous global conflicts between the United States and China, the outstanding performance of TSMC along with other AI-related firms has greatly lifted Taiwan’s flagship Taiex Index by more than forty percent in the previous year. Broader market concerns have been eclipsed by the exponential growth in AI infrastructure investment, indicating the industry’s strong potential.
Intelligence Insights from Bloomberg
Bloomberg Intelligence reports that the higher-than-expected consumer interest in CoWoS advanced packaging was the reason behind TSMC’s second-quarter revenues exceeding projections. This spike in sales will probably lead to a beat in results because it will somewhat offset the margin dilution from the 3nm ramp-up.
Given the robust demand for its 3nm as well as CoWoS packaging technologies, TSMC’s capability to negotiate pricing hikes will be a major topic of discussion at the next earnings call.
Concerns about Valuation
Even while TSMC’s future looks promising, Nvidia’s valuation is starting to raise questions. Recently, an analyst at New Street Research downgraded Nvidia’s shares, stating that it is approaching “full value.” Following an almost 240 percent increase in 2023, Nvidia’s stocks have surged 165 percent this year, prompting concerns about the durability of its sharp rise.
In summary
The artificial intelligence infrastructure boom is driving TSMC’s sales spike, which highlights the increasing significance of sophisticated chip technologies in enabling the forthcoming wave of technology breakthroughs.
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