TSMC’s October Revenue Growth Hits 2-Year Low – What’s Next for Taiwan Semiconductor (TSM) Stock?

Taiwan Semiconductor's growth engine sputters as October revenue posts its weakest expansion since 2023. The chipmaking giant's slowdown raises eyebrows across tech and finance circles.

Behind the numbers: While still the undisputed leader in semiconductor manufacturing, TSMC's latest figures suggest even industry titans aren't immune to macroeconomic headwinds. Analysts point to softening demand in consumer electronics and inventory corrections across the supply chain.

The big picture: This slowdown comes amid TSMC's massive capex push into next-gen 3nm and 2nm processes. Some Wall Street suits are already sharpening their pencils to downgrade forecasts – because nothing excites financiers like a good old-fashioned overreaction to single-month data.

TLDR

• TSMC reported October revenue of $11.86 billion, up 16.9% year-over-year but representing the slowest growth pace since February 2024
• The October growth rate of 16.9% slowed markedly from September’s 31.4% increase, raising questions about AI demand sustainability
• Year-to-date revenue through October reached $3.13 trillion, climbing 33.8% compared to the same period last year
• Nvidia CEO Jensen Huang requested increased chip supplies from TSMC at the company’s annual sports day, stating business remains strong and growing monthly
• TSMC stock rose nearly 3% in premarket trading despite the slower growth figures and ongoing concerns about an AI bubble

Taiwan Semiconductor Manufacturing reported October revenue of NT$367.47 billion, translating to roughly $11.86 billion. The figure represents a 16.9% increase compared to the same month last year.

Taiwan Semiconductor Manufacturing Company Limited, TSM

The growth rate marks a sharp deceleration from September’s 31.4% year-over-year jump. According to Bloomberg, this represents the slowest pace of annual growth since February 2024.

Month-over-month, TSMC’s revenue climbed 11% from September. The company’s cumulative revenue from January through October totaled NT$3.13 trillion, up 33.8% from the prior year period.

The chipmaker previously guided fourth-quarter revenue between $32.2 billion and $33.4 billion when it reported third-quarter results in mid-October. The midpoint suggests approximately 22% annual growth for the quarter.

TSMC remains a primary supplier for Nvidia, producing the advanced chips that power AI applications. The relationship has driven much of TSMC’s valuation surge over the past three years.

Nvidia Requests More Production

Nvidia CEO Jensen Huang attended TSMC’s annual sports day over the weekend. He told attendees that he had requested additional wafer production from the chipmaker.

“The business is very strong, and it’s growing month by month, stronger and stronger,” Huang stated at the event. TSMC CEO C.C. Wei confirmed the request during a conversation with reporters.

The comments from both executives contrast with recent market concerns about AI demand. Still, the slower October growth rate has sparked fresh speculation about whether AI spending can maintain its current trajectory.

Market Reaction and AI Concerns

TSMC shares climbed nearly 3% in Monday’s premarket session. Nvidia stock also gained more than 3% during the same period.

The positive movement came despite worries that have recently gripped technology stocks. The Nasdaq Composite dropped 3% last week, posting its worst weekly performance since early April.

Prominent investors and analysts have voiced caution about AI valuations. Short seller Michael Burry took large short positions in both Nvidia and Palantir recently.

Goldman Sachs CEO David Solomon commented at the Global Financial Leaders’ Investment Summit in Hong Kong that “technology multiples are full.” His remarks reflect growing Wall Street concern about stretched valuations in the sector.

TSMC supplies chips to companies worldwide as they build data centers and servers for AI infrastructure. The October revenue data confirms the company continues benefiting from this demand, even as the growth rate moderates from recent peaks.