Profit beats expectations as AI boom leads to 54% rise

shares of Taiwan Semiconductor Manufacturing CompanyThe world’s largest producer of advanced chips, serving customers like Apple And NVIDIAThe stock rose nearly 10% in trading Thursday after the company reported a 54% rise in third-quarter net profit.

The company expects annual revenue growth in the last three months of the year, as global chipmakers benefit from increased demand driven by artificial intelligence applications.

Shares of chip companies rose on the results. shares of NVIDIA, micron And amd All were up about 1% when markets closed Thursday.

The company’s net income in the July–September quarter was 325.3 billion New Taiwan dollars ($10.1 billion), surpassing the LSEG estimate of NT$300.2 billion cited by Reuters.

Third-quarter net revenue came in at $23.5 billion, up 36% year-on-year, TSMC’s gross margin expanded to 57.8% in July-September, compared with 54.3% in the same period last year.

“Based on the current business outlook, we expect our fourth quarter revenue to be between $26.1 billion and $26.9 billion, representing 13% sequential growth or 35% year-over-year growth at the midpoint,” TSMC chief financial executive Wendell Huang said during an earnings call after the results were released, according to a call transcript produced by FactSet.

“In the third quarter, our business was supported by strong smartphone and AI-related demand for our industry-leading 3nm and 5nm technologies,” TSMC said in a statement, referring to its semiconductor nodes.

In Thursday’s earnings call, TSMC Chairman and CEO CC Wei stressed that the demand for AI is “real” and that as a result the company has experienced “the deepest and broadest growth of anyone in this industry.”

“We talk to our customers all the time, including our hyperscaler customers who are building their own chips. And almost every AI innovator is working with TSMC,” he said.

The company’s Taipei-listed shares have gained nearly 80% year to date, outpacing a gain of 28.57%. mass market At the same time.

TSMC now estimates its capital spending will rise to slightly more than $30 billion this year, it said during its earnings call. The company’s capital expenditure costs rose to $6.4 billion in the third quarter, from $6.36 billion in the previous three months.

The Taiwanese chipmaker, whose advanced chips are key to products ranging from smartphones to AI applications, is expanding its manufacturing presence around the world, and making massive overseas investments. $65 billion for three chip plants in Arizona To meet US demand, as well Opening its first factory in Japan earlier this year.

Netherlands-based TSMC’s earnings decline comes in the same week asmlThe Taiwanese company that supplies the machines has issued a lower-than-expected forecast for net sales. sending shares tumbling,

Some market participants have questioned the long-term sustainability of the artificial intelligence boom and the returns on increased investment in the technology sector — while Yang Liu, CEO and chairman of key Apple supplier Foxconn, told CNBC last week that the AI ​​mania “there’s still some time left,” as advanced language models evolve with each new iteration.

Correction: This article has been updated to accurately reflect that TSMC’s third-quarter net income reached 325.3 billion New Taiwan dollars.