Taiwan Semi’s Earnings: Implications for 2 Chip Stocks

U.S. stocks edged higher Thursday, propelled by an optimistic revenue outlook from Taiwan Semiconductor Manufacturing (TSMC), a key player in the global semiconductor landscape. This news provided a welcome distraction from escalating trade tensions with China, which had been weighing on investor sentiment. The market is keenly aware of the delicate balance between economic opportunities in China and geopolitical risks.

TSMC’s bullish forecast, and its implications for the broader tech sector, overshadowed renewed trade anxieties. The initial jolt came after reports that the U.S. administration was considering further trade restrictions, including potential bans on certain exports to China.

The positive ripple effect from TSMC’s earnings report was particularly noticeable in the semiconductor sector.

Chip designers Nvidia and Broadcom both experienced gains Thursday, fueled by TSMC’s impressive Q3 earnings and its forward-looking projections. TSMC reported a substantial 39% increase in profits compared to the previous year and raised its 2025 revenue growth forecast, exceeding analyst expectations.

During the earnings call, TSMC CEO C.C. Wei emphasized the company’s growing confidence in the generative AI “mega trend.” This conviction stems from the increasing demand for high-performance computing solutions, crucial for AI applications. TSMC’s position as a leading manufacturer of advanced logic chips for AI accelerators makes it a bellwether for the entire industry. This development is indeed a positive sign for companies like Nvidia and Broadcom, as TSMC is a critical manufacturing partner for their high-end processors. The implications for Nvidia and Broadcom are significant, particularly given their strategic focus on the AI market. TSMC’s earnings provide strong validation to this pivotal technology sector.

Beyond the semiconductor sector, other stocks in portfolios saw gains on Thursday.

Starbucks shares experienced a jump, reportedly linked to revised valuations of the company’s China business. Assessments are pointing towards stronger-than-anticipated growth and profitability in the Chinese market, driven by a resurgence in consumer spending. Starbucks’ commitment to digital innovation and loyalty programs also appears to be paying off in the Chinese market.

Salesforce stock also surged after a bullish analyst day presentation at Dreamforce, the company’s annual conference. Analysts cited Salesforce’s successful integration of generative AI into its core product offerings and its expanding market share in customer relationship management (CRM) as key drivers for the positive outlook.