TSMC Stock Rises Despite Sales Growth Slowdown. Why the AI Trade Is Alive and Well.

Core Insights - Taiwan Semiconductor Manufacturing Company (TSMC) reported its slowest monthly sales growth in over 18 months, with October revenue reaching 367.47 billion New Taiwan dollars ($11.86 billion), marking a 17% year-over-year increase, the slowest since February 2024 [3][4][6] - Despite the slowdown in sales growth, TSMC raised its 2025 revenue growth guidance to the mid-30% to 40% range, driven by a projected doubling of AI-related chip revenue [4][5] - Nvidia remains TSMC's most significant customer in the AI sector, with indications of strong demand, as Nvidia's CEO requested a 50% increase in TSMC's 3-nanometer wafer production [4][6][7] Revenue and Growth - TSMC's October revenue of $11.86 billion is a new monthly record, but the 17% growth is the slowest annual growth rate since February 2024 [3][4] - The company has adjusted its revenue growth forecast for 2025 to the mid-30% to 40% range, up from about 30% in U.S. dollar terms, primarily due to AI-related chip revenue [5][6] - TSMC anticipates that AI-related chip revenue will double in 2025 and grow at a mid-40% annual rate over the next five years [5][6] Market Reaction - TSMC's American depositary receipts rose by 3.6% in morning trading, contributing to a 45% gain for the year up to the previous Friday's close [7]