2024-10-17 16:56:00
Tranquility comes slowly for technology companies, a driving force in stock markets in recent months. After the shock caused by ASML’s accounts, the health of the business of TSMC, the main supplier of chips to Nvidia and Apple, helps ease the tension. While the maker of chip lithography cut its forecast more than the market expected, the Taiwanese company beat expectations and revised its revenue upwards. For the full year 2024, sales are expected to increase by 30%, higher than the 20% consensus forecast. This revision is the second outlook update from TSMC in less than three months. The results became known with the closure of the Taiwanese market, but the ADRs (American Depositary Receipts) listed in the USA rose by over 11.5% in the middle of the session and their capitalization exceeded one trillion.
Investors who had taken the opportunity to take profits in recent days are taking back positions in semiconductor makers such as Infineon, STMicroelectronics and Soite, which ended the session with gains of 1.68%, 1.28% and 1, respectively. 39%. The ASML, which has collapsed by 7% in the last two days, puts a stop to the flight of money and closes the session in balance.
The gains were replicated in the U.S. At mid-session, Nvidia gained 3.26% and headed to a new high, while Qualcomm and AMD gained 1.91% and 1.34%. This recovery and TSMC’s accounts confirm the forecasts of UBS analysts who yesterday called for calm and reiterated that the growth prospects in the artificial intelligence business remain solid. TSMC’s accounts confirm an idea that the CEO of ASML and some managers had already underlined previously: the bad behavior of the Dutch company was due not so much to the artificial intelligence sector, but rather to the weak demand from the industry and the automotive sector.
“The demand is real and I think this is just the beginning,” said CC Wei, CEO of TSMC. The gross margin forecast of more than 57% for the fourth quarter and the rapid increase in revenue are seen as a sign that the hunger of companies like Nvidia for chips that power artificial intelligence remains acute. Analysts are optimistic and confident that the company will increase its revenue by 25% next year.
“TSMC is not just an AI machine,” Ben Barringer, technology analyst at Quilter Cheviot, tells Bloomberg. “It is much better positioned than Intel and Samsung, which have had their problems. TSMC has positioned itself well and in the event of a hypothetical recession it should be in a solid position to overcome it and move forward,” he emphasizes.
Analysts point out that if anyone doubted the sustainability of AI growth, TSMC’s accounts show there is no end in sight in the short term and point out that the spectacular improvement in margins is particularly important at a time when costs of raw materials for the production of chips continue to increase. Citi, despite removing ASML from the list of European stocks yesterday, recommends buying shares of the Taiwanese company. The US bank points out that the pace of growth is astonishing thanks to the strong demand for artificial intelligence. The fever for artificial intelligence continues, but it is becoming increasingly selective.
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