Nvidia shares powered higher in early Thursday trading, putting the stock within touching distance of its all-time high, following a blowout set of third quarter earnings from the chipmaker at the epicenter of its supply chain.
Nvidia (NVDA) , which sits just below Apple (AAPL) as the world’s second-most valuable company by market cap, has been riding a massive AI demand wave for much of the past 18 months as the world’s biggest tech companies scramble to invest billions in the hot new technology.
That’s put tremendous pressure on the broader semiconductor supply chain, as well as the production capacity of Taiwan Semiconductor Manufacturing Co (TSMWF) , the world’s largest contact chip maker, as demand continues to accelerate and the market remains dominated by only a handful of chip makers and designers.
Taiwan Semiconductor, the world’s biggest contract chipmaker and a key Nvidia supplier, posted record third quarter earnings Thursday.
Group CEO C.C. Wei told investors that the AI demand story is “real and just the beginning”, adding that overall activity outside of the AI investment race is “stabilized and start to improve.”
‘The demand is real’
TSMC posted record quarter profits of T$325.3 million and forecast a full-year revenue growth rate of around 30%, while pegging its overall capital spending plans at just over $30 billion for this year and higher still in 2025.
“Our customer’s demand far exceeds our ability to supply,” Wei said.
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Wedbush analyst Dan Ives said the “monster” numbers from TSMC were “very important data point for AI Revolution thesis and growth looking ahead.
“As we said ASML is background noise,” he added, referring to the European chip equipment maker’s muted 2025 sales forecast from yesterday. “TSMC is what matters for tech and AI trade.”
Data from market research group IDC suggests generative AI spending could top $150 billion by 2027, a level that implies a compound annual growth rate of around 86% from 2023 levels.
Total AI spending, meanwhile, which includes software, hardware, and services, is likely to rise from $235 billion last year to around $632 billion by 2028, according to IDC estimates.
Advanced Micro Devices (AMD) , meanwhile, told investors last week that the market for AI accelerators, the chips that power large-language models used by hyperscalers such as Microsoft (MSFT) , Alphabet (GOOGL) and Meta Platforms (META) , could reach $500 billion within three years, a 25% increase from its prior forecast.
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All of this puts Nvidia, and its tightening grip on the market for the chips and processors that power AI applications, in sharp focus for investors heading into the start of the tech earnings season.
Nvidia told investors in late August that it saw current-quarter revenue in the region of $32.5 billion, more than double the tally from the same period last year, even as it faced some delays in shipping its new line of Blackwell processors amid design changes and supply-chain snarls.
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Finance chief Colette Kress said Blackwell should generate “several billion” in revenue for Nvidia’s fiscal fourth quarter, which ends in January, adding that legacy Hopper sales would accelerate over the second half of the year.
Nvidia shares were marked 3.23% higher in premarket trading to indicate an opening bell price of $140.10 each.
TSMC shares, meanwhile, surged 8.35% to $203.13 each, extending their 2024 gain past 90%.
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