TLDR
- TSMC stock up 71% in six months driven by AI chip manufacturing for Nvidia, AMD, Apple and other major tech companies
- ASML shares gained 42% over same period as semiconductor equipment maker benefits from foundry expansion plans
- TSMC expects Q3 revenue of $32.4 billion, representing 39% year-over-year growth when results release October 16
- ASML reports Q3 earnings October 15 with projected revenue of 7.65 billion euros despite earlier tariff concerns
- AI chip market forecast to grow by $902 billion through 2029 as data center capacity shortages drive expansion
Taiwan Semiconductor Manufacturing Company and ASML are positioned for continued growth in October as both companies prepare to release quarterly earnings. The two semiconductor industry leaders have posted strong gains over the past six months while capitalizing on increased demand for AI chips.
TSMC shares have climbed 71% in the last six months. The company manufactures chips for major technology firms including Nvidia, AMD, Broadcom, Qualcomm, MediaTek, Marvell, Sony, and Apple. Even integrated device manufacturers like Micron and Intel use TSMC facilities for chip production.
The Taiwan-based foundry will report third quarter results on October 16. Management has guided for revenue of $32.4 billion at the midpoint of estimates. This would represent a 39% increase compared to the same quarter last year when the company reported 36% revenue growth.
TSMC currently trades at 24 times forward earnings. The stock could receive a boost when earnings are released given the strong demand environment for AI chips across multiple applications including smartphones, computers, and data centers.
Growing AI Chip Market
Market research firm TechNavio projects the AI chip market will add $902 billion in revenue through 2029. Consulting firm Bain & Company estimates AI compute demand will exceed supply until the end of the decade. Data centers are experiencing capacity shortages that require additional investment in servers.
AI servers use central processing units, graphics processing units, and custom processors. TSMC manufactures these chips for its diverse customer base. The supply-demand imbalance creates a favorable environment for the foundry’s continued growth.
ASML has gained 42% over the past six months. The semiconductor equipment manufacturer supplies the machines that foundries like TSMC use to fabricate chips. ASML customers include TSMC, Intel, and Micron.
The company will release third quarter results on October 15. Management has projected revenue of 7.65 billion euros for the quarter. This guidance does not indicate major growth compared to the prior year period.
Equipment Spending Outlook
ASML previously expressed caution about potential tariff impacts on its business. However, management stated on the last earnings call that tariff effects have been lower than expected. The company could exceed its guidance when results are announced.
Industry association SEMI forecasts advanced chipmaking capacity will increase 69% by 2028. ASML holds a dominant position in advanced chipmaking equipment. Rising capital expenditures from technology companies to address backlogs will benefit equipment suppliers.
The company trades at 31 times forward earnings. This represents a slight discount to the Nasdaq-100 index earnings multiple. ASML revenue growth has accelerated since last year as demand for advanced manufacturing equipment increased.
Foundries and chipmakers are investing in more equipment to expand production capacity. This trend supports ASML’s growth outlook as AI chip demand continues. The shortage of data center capacity creates pressure to build out infrastructure quickly.
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