TSMC Boosts Outlook as AI Demand Drives Record Profits

Taiwan Semiconductor Manufacturing Co. (TSMC) has raised its revenue forecast following a quarter of record profits, driven by surging AI demand. The world's largest chipmaker reported a 39.1% jump in net profits for the third quarter, highlighting the robust growth of the AI market despite concerns about a potential bubble.

TSMC's net profit for July-September reached T$452.3 billion ($14.76 billion), exceeding analyst estimates of T$417.7 billion. This strong financial performance reflects the company's confidence in the continued growth of AI, as CEO C.C. Wei noted that demand is stronger than anticipated. The company has increased its 2025 revenue growth forecast to the mid-30% range in U.S. dollar terms, up from around 30%.

Capital spending is projected to reach up to $42 billion for 2025, as TSMC anticipates sustained AI demand. Recent mega deals by AI firms and chipmakers, including OpenAI, Nvidia, AMD, and Broadcom, aim to build over $1 trillion in data center capacity, further driving the need for advanced chips.

While these multi-billion dollar investments have raised concerns about a potential bubble similar to the dotcom era, recent reports suggest that demand remains resilient. Macquarie Asset Management's sale of Aligned Data Centers and ABB's increased orders from data centers built for AI indicate ongoing strength in the market.

TSMC plans a $100 billion U.S. investment, with $65 billion allocated for three Arizona plants, one of which is already operational. Despite geopolitical uncertainties and trade policies, the company remains optimistic about AI's dramatic growth, even if the Chinese market becomes inaccessible due to U.S. restrictions.

ASML, a major TSMC supplier, reported strong third-quarter bookings but anticipates lower demand from China next year. Samsung Electronics also expects its largest quarterly profit in over three years, boosted by AI trends. Taiwan-listed TSMC shares have risen 38% this year, outperforming the broader market's 20% increase, largely ignoring tariff concerns.

Overall, TSMC's bullish outlook reflects the industry's strong belief in the AI megatrend, as AI demand continues to fuel record profits and drive significant investments in the semiconductor sector.