Chip stocks showed mixed performance following Taiwan Semiconductor Manufacturing (NYSE:TSM) increased its forecast and emphasized "confidence in the AI megatrend."
The outcomes and future projections also received favorable responses from Wall Street analysts.
BofA increased the price forecast for TSM's stock to NT$1,800 ($360 for ADR) from NT$1,600 ($330 for ADR) and maintained its Buy recommendation for the shares.
"Strong demand from AI was a key topic during the earnings call, and we believe the company is showing slightly more optimism regarding its long-term growth path (while maintaining a mid-40s % CAGR). In our opinion, TSMC's standing in this area remains strong through its system-level performance achieved via front and back-end manufacturing, as it starts engaging with 'customers' customers' to better meet the need for cutting-edge technology. Considering its dominant position within the AI growth trend, we reaffirm our recommendation. Buy," said analysts led by Mike Yang.
Wells Fargo stated that the TSM results and remarks indicated growing interest in AI.
Analysts observed that TSM did not offer any particular details regarding its perspectives on sales of graphics processing units, or GPUs, in China; instead, it merely stated its confidence that demand for AI will keep increasing at a 40% or higher compound annual growth rate, or CAGR, over the coming years.
We still regard TSMC's High Performance Computing, or HPC/AI statements as favorable for NvidiaNVDA), Advanced Micro Devices (AMD), Broadcom (AVGO), and Marvell Technology (MRVL," said analysts headed by Aaron Rakers. "TSMC did not offer any specific details regarding its CoWoS [Chip-on-Wafer-on-Substrate] capacity growth strategies - merely stating that it is striving 'very hard to close the gap.'"
Earlier this morning, the global foundry announced its third quarter resultsresultswhich exceeded analysts' expectations. The company also increased its revenuegrowthfull-year forecast in the mid-30% range, versus a 30% growth projection mentioned during the second quarter results.
Nevertheless, Chairman and CEO C.C. Wei expressed concerns regarding uncertainties and risks stemming from the possible effects of tariff policies during the company's earnings call on Thursday.
Although we have not noticed any changes in our customers' behavior yet, we recognize there are uncertainties and risks associated with the possible effects of tariff policies, particularly in consumer-focused and price-sensitive market segments,saidWei stated, "Therefore, we will stay aware of the possible effects and act carefully in our business planning for 2026 by keeping up our investments in the future megatrend."
Wei mentioned that companies like TSM are utilizing AI internally to boost productivity and efficiency. He pointed out that enterprise AI is another factor driving demand, and he also noted that the company continues to observe the growing rise of sovereign AI.
"We are also pleased to observe a sustained positive outlook from our clients. Furthermore, we have directly received strong indications from our clients' clients, who are asking for the capacity to support their operations. As a result, our confidence in the AI megatrend is growing, and we believe the demand for semiconductors will remain very foundational," said Wei.
TSM shares remained mostly unchanged but ended in the positive. Intel (INTC), Marvell Technology (MRVL) and Analog Devices (ADI) rose about 1% each, while GlobalFoundries (GFS), Texas Instruments (TXN), and Lattice Semiconductor (LSCC) were mostly stable but in the positive range.
AI chipmakers, Nvidia (NVDA) and Advanced Micro Devices (AMD) rose nearly 1%. Broadcom (AVGO) jumped about 2%, while Qualcomm (QCOM) was mostly flat but in the positive.
Shares of chip equipment manufacturers: ASML (ASML) rose about 2% and Applied Materials (AMAT) climbed nearly 1%. Lam Research (LRCX) fell around -1%, while KLA (KLAC) was flat but in the red.
More about Taiwan Semiconductor Manufacturing
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- Taiwan Semiconductor Manufacturing Company Limited (TSM) Third Quarter 2025 Earnings Call Transcript
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- Wedbush's analysis of Asia indicates positive outlook regarding the "AI Revolution," leading to increased demand for Nvidia's chips.
- TSMC's Q3 results exceed expectations, with an updated forecast driven by the AI 'megatrend'