TSMC, the world’s biggest producer of advanced chips, raised its full-year revenue forecast on Thursday, citing a bullish outlook for artificial intelligence spending after posting a record profit that blew past market estimates. The Taiwanese chipmaker now expects mid-30% growth in U.S. dollar terms for 2025, up from around 30%, while maintaining capital spending at $42 billion.
The strong results underscore continued faith in AI, brushing off concerns about a bubble forming in the sector. U.S.-listed shares of Taiwan Semiconductor Manufacturing Co jumped 1.6% in pre-market trade in New York and boosted U.S. semiconductor stocks, including AI leader Nvidia and Advanced Micro Devices. The company expects robust artificial intelligence demand to continue, with CEO C.C. Wei telling an earnings call that “AI demand is very strong—more strong than we thought three months ago.”
Record Profits Signal Strengthening AI Conviction
TSMC’s third-quarter net profit climbed to T$452.3 billion ($14.76 billion) for July-September, well ahead of the T$417.7 billion LSEG SmartEstimate drawn from 20 analysts. The SmartEstimates are weighted toward forecasts from analysts who are more consistently accurate. Benefiting from surging demand for advanced chips used in AI applications, the company posted a 39.1% jump compared to the same period last year.
Wei said the company remains “comfortable that the demand on leading-edge semiconductors is real.” He added that TSMC needs to “work very hard to narrow the gap” between supply and demand, directly addressing investor questions about capacity expansion. The customers are sending strong signals, requesting capacity to support their business needs, which has strengthened the company’s conviction in the AI megatrend.
A flurry of mega deals between AI firms and chipmakers—notably involving OpenAI, AMD, and Broadcom—over the past month aims to build $1 trillion or more in data center capacity. This portends massive future demand for chips, which make up a significant portion of the cost of data centers. Nvidia, AMD, and Broadcom all rely on TSMC for chip production, positioning the Taiwanese chipmaker at the heart of the AI infrastructure buildout.
The multi-billion dollar investment announcements have raised concerns about the formation of a bubble reminiscent of the dotcom boom and bust. However, securities investors remain on guard for signals that demand is tailing off or that massive spending isn’t paying off as anticipated. Recent company announcements indicate the sector remains resilient, with the head of Australia’s Macquarie Asset Management (MAM) stating that the sale of its Aligned Data Centers business in a deal worth $40 billion was not a sign the global data center boom had peaked.
Trump Policies and Global Expansion Plans
U.S. President Donald Trump’s trade policies and threats to impose tariffs on semiconductors have created uncertainty for the global chip industry and TSMC. Despite this, Wei maintained that even if the China market becomes “not available” to the company because of U.S. restrictions, “AI’s growth will be very dramatic.” The company announced plans for a $100 billion U.S. investment with Trump at the White House in March, on top of $65 billion pledged for three plants in the state of Arizona, one of which is already up and running.
TSMC said it will be prudent in its business planning going into 2026, balancing aggressive expansion with market realities. The company’s customers also include iPhone maker Apple, demonstrating diversified revenue streams beyond pure AI applications. Taiwan-listed shares in TSMC have risen 38% this year, largely brushing off concerns about tariffs and running ahead of the 20% rise for the broader market.
On Wednesday, top semiconductor equipment maker ASML, for which TSMC is a major customer, said third-quarter bookings beat market forecasts but expected a significant fall in demand from China next year. Meanwhile, Samsung Electronics said on Tuesday it expected its biggest quarterly profit in over three years, also thanks to the AI boom. ABB’s big increase in orders in the United States during the third quarter was driven by demand from areas like data centers being built for AI infrastructure.
The continuous strong outlook from TSMC’s customers, who directly receive allocation for new capacity, suggests the AI megatrend is strengthening rather than weakening. Wei emphasized during the earnings call that the company has received exceptionally strong signals about future needs, reinforcing the view that spending on artificial intelligence infrastructure will remain elevated through 2025 and beyond.
