TSMC sees slowdown in growth, but AI investments continue to rise

"Taiwan Semiconductor Manufacturing (TSMC) reports slower revenue growth for October. This raises questions about the sustainability of the current AI boom. This is according to Bloomberg. Despite continued demand for advanced chips from companies such as Nvidia, the declining growth rate points to a possible cooling market. The chip giant recorded a 16.9 percent year-on-year increase in revenue in October. That is the lowest growth rate since February 2024."

"Analysts expect growth to remain around 16 percent in the current quarter. Nevertheless, investor confidence has not disappeared. After all, SMC shares have risen by about 37 percent since the beginning of this year. The technology sector's recovery took a hit last week when Asian tech stocks fell sharply. This decline reminded investors that the spectacular rally in AI and semiconductor stocks may have reached a temporary peak."

"Nevertheless, many players in the sector remain optimistic about the prospects for artificial intelligence. One weak month is unlikely to have much impact on long-term expectations, especially as major technology companies continue to expand their investment plans. Meta Platforms, Alphabet, Amazon, and Microsoft will collectively spend more than $400 billion on their AI infrastructure next year, an increase of 21 percent compared to 2025. In doing so, they aim to secure their lead in the race for leadership in emerging technologies."

Taiwan Semiconductor Manufacturing reported 16.9 percent year-on-year revenue growth in October, the lowest monthly increase since February 2024. Analysts forecast growth near 16 percent for the current quarter. TSMC shares have risen about 37 percent year-to-date. Asian technology stocks fell sharply last week, prompting concern that the AI and semiconductor rally may have reached a temporary peak. Major technology companies plan to spend more than $400 billion on AI infrastructure next year, a 21 percent increase versus 2025. Nvidia reported continued month-over-month strength and sought additional TSMC chip capacity, while AMD, Qualcomm, and Apple also depend on TSMC for advanced chips.

Read at Techzine Global