TSMC’s revenue hits a record high, but that doesn’t mean you should blindly chase the AI rally!
On October 8, TSMC reported third-quarter revenue of approximately NT$1.494 trillion, up about 50% year over year and setting a new record. Demand for AI chips remains strong. But what the market really wants to know is whether the full earnings report on October 15 can continue to exceed expectations.
For this earnings report, I’ll be watching three key signals:
First, can profit margins hold up? TSMC previously forecast a gross margin of 65% to 67% for the third quarter. Revenue growth is only the first step; profit margins are a better measure of the real value of AI orders.
Second, will AI demand from customers like Nvidia continue? Markets trade on the future. If management remains optimistic about demand for advanced process technologies and advanced packaging, that could provide fresh support for the AI supply chain. But if the outlook is not strong enough, watch out for a “sell the news” reaction.
Third, the fourth-quarter outlook and capital expenditure plans for next year. Strong orders matter, but it’s just as important that capacity expansion translates into profits.
There’s another risk that’s easy to overlook: good earnings don’t guarantee a rising share price. TSMC’s stock was already under pressure before its revenue announcement, showing that the market is looking beyond the company’s fundamentals to Treasury yields, oil prices, and overall tech stock valuations.
For crypto, strength in AI tech stocks could improve risk appetite and indirectly benefit BTC and ETH. But if Treasury yields keep rising and the U.S. dollar strengthens, the crypto market could still come under pressure. You can’t determine where crypto prices are headed based on TSMC’s earnings report alone.
My view: On October 15, rather than focusing only on whether revenue sets another record, pay close attention to gross margins, fourth-quarter guidance, and management’s assessment of AI demand.
If results beat expectations but the stock doesn’t rise, it could mean the good news was already priced in. If both earnings and forward guidance are strong, there will be more reason to watch whether the AI rally can spread further.
Do you think TSMC’s earnings report will reignite the AI rally, or will investors sell the news?
On October 8, TSMC reported third-quarter revenue of approximately NT$1.494 trillion, up about 50% year over year and setting a new record. Demand for AI chips remains strong. But what the market really wants to know is whether the full earnings report on October 15 can continue to exceed expectations.
For this earnings report, I’ll be watching three key signals:
First, can profit margins hold up? TSMC previously forecast a gross margin of 65% to 67% for the third quarter. Revenue growth is only the first step; profit margins are a better measure of the real value of AI orders.
Second, will AI demand from customers like Nvidia continue? Markets trade on the future. If management remains optimistic about demand for advanced process technologies and advanced packaging, that could provide fresh support for the AI supply chain. But if the outlook is not strong enough, watch out for a “sell the news” reaction.
Third, the fourth-quarter outlook and capital expenditure plans for next year. Strong orders matter, but it’s just as important that capacity expansion translates into profits.
There’s another risk that’s easy to overlook: good earnings don’t guarantee a rising share price. TSMC’s stock was already under pressure before its revenue announcement, showing that the market is looking beyond the company’s fundamentals to Treasury yields, oil prices, and overall tech stock valuations.
For crypto, strength in AI tech stocks could improve risk appetite and indirectly benefit BTC and ETH. But if Treasury yields keep rising and the U.S. dollar strengthens, the crypto market could still come under pressure. You can’t determine where crypto prices are headed based on TSMC’s earnings report alone.
My view: On October 15, rather than focusing only on whether revenue sets another record, pay close attention to gross margins, fourth-quarter guidance, and management’s assessment of AI demand.
If results beat expectations but the stock doesn’t rise, it could mean the good news was already priced in. If both earnings and forward guidance are strong, there will be more reason to watch whether the AI rally can spread further.
Do you think TSMC’s earnings report will reignite the AI rally, or will investors sell the news?