TSM earnings signal AI boom through 2030; analyst eyes Nvidia, Broadcom

Taiwan Semiconductor Manufacturing released earnings showing that the artificial intelligence hardware buildout remains robust and far from completion. In the second quarter, TSMC's revenue grew 36% year over year (in New Taiwan Dollars), while earnings per share jumped 77%, reflecting improving operating leverage as the company scales production. Most significantly, TSMC announced plans to invest another $100 billion（約16兆円） in its Arizona fabrication facilities—a bold commitment that signals confidence in sustained chip demand. CEO C.C. Wei reinforced this outlook by stating that strong chip demand will persist through 2029 or 2030, effectively locking in a multi-year growth horizon.

The stock market's initial reaction was muted; despite these strong results and rosy guidance, TSMC has fallen about 15% from its all-time high. This disconnect between fundamentals and valuation has created a contrarian opportunity for individual investors. As the only chip manufacturer with sufficient capacity and advanced-enough technology to support a major AI computing buildout, TSMC is positioned to remain a core supplier throughout the cycle.

Nvidia and Broadcom are primed to benefit from this extended demand environment. Nvidia faces 82% estimated revenue growth for the remainder of the current fiscal year and 42% growth next year according to Wall Street analysts—yet the stock remains down more than 10% from its all-time high. When valued against next year's earnings, analysts contend the company looks underpriced and could rally by year end. Broadcom, hit harder with a decline of more than 20% from its peak, faces an even more dramatic inflection. The company's custom AI chip business is expected to generate $100 billion（約16兆円） in AI semiconductor revenue in the coming year, a sevenfold increase from the $10.8 billion（約1.7兆円） in revenue that division posted last quarter. This explosive growth potential explains why Broadcom trades at 19 times forward FY 2027 earnings—a valuation that reflects a fundamental transformation in the business mix. Together, the three stocks signal that the semiconductor cycle underpinning artificial intelligence infrastructure remains in early innings, offering investors multiple entry points at reduced valuations.

TSMC's second-quarter results have reignited conviction in the multi-year semiconductor cycle tied to artificial intelligence infrastructure. The 36% revenue growth and 77% earnings per share growth underscore the company's pricing power and operational efficiency gains as it captures the bulk of advanced chip production for AI workloads. Critically, the company's willingness to invest another $100 billion（約16兆円） in Arizona capacity—a massive commitment—signals that management expects demand to remain strong well into the next decade. CEO C.C. Wei's explicit guidance that chip demand will persist through 2029 or 2030 effectively rules out an imminent slowdown in the AI buildout, a concern that had weighed on valuations earlier in the year.

This outlook has immediate implications for Nvidia and Broadcom. Nvidia's forecast for 82% revenue growth for the remainder of the fiscal year and 42% growth next year is underpinned by TSMC's continued capacity and reliability as a supplier. Broadcom, meanwhile, is undergoing a more dramatic transformation: its custom AI chip business is expected to generate $100 billion（約16兆円） in revenue next year, up from $10.8 billion（約1.7兆円） last quarter—a trajectory that positions the company as a direct beneficiary of intensifying AI chip demand. Despite recent sell-offs across all three names, the constellation of strong guidance, massive capital investment, and forward earnings estimates suggests the market has not fully priced in the length and breadth of the AI cycle.

No comments yet. Be the first to share your thoughts!