Nvidia Stock Investors Just Got Great News From TSMC

Nvidia (NASDAQ: NVDA) investors have received a significant boost of confidence following Taiwan Semiconductor Manufacturing Company's (TSMC) strong sales forecast, which highlights the robust demand for AI chips, particularly those used by Nvidia. TSMC, the world's leading contract chipmaker, raised its expectation for annual revenue growth and stated that sales from AI chips would account for mid-teen percentage of its full-year revenue. This positive outlook from TSMC, one of Nvidia's key partners, has reinforced investor optimism about the demand for Nvidia's AI chips and the company's growth prospects.



TSMC's increased revenue and profit growth in the third quarter reflect the strong demand for AI chips, with Nvidia being one of the primary beneficiaries. The Taiwanese semiconductor giant reported a 54% increase in net profit and a 36% jump in net revenue for the July-September quarter, driven by robust smartphone and AI-related demand for its industry-leading 3nm and 5nm technologies. This strong performance indicates that the demand for advanced AI chips, such as those produced by Nvidia, remains robust.

TSMC's expansion in advanced packaging capacity is another positive development for Nvidia's supply chain. The company expects its capital expenditure for this year to increase to slightly more than $30 billion, with a significant portion of this investment likely going towards expanding its advanced packaging capacity. Nvidia is expected to get its hands on 63% of this increased capacity, further emphasizing the strong demand for Nvidia's AI chips and the company's ability to fulfill more orders.



The increased capital expenditure by major cloud computing providers, such as Meta Platforms, Microsoft, Alphabet, and Amazon, is also expected to have a positive impact on Nvidia's revenue growth in the new fiscal year. These four tech giants are set to raise their combined capex by 46% in 2025 to a whopping $325 billion, with a significant portion of this spending likely going towards acquiring AI chips like those produced by Nvidia. Nvidia's dominant market position, improved supply chain, and validation from TSMC's strong sales forecast further suggest that the company's revenue growth in the new fiscal year is likely to be robust.



In conclusion, Nvidia investors have received great news from TSMC, with the Taiwanese semiconductor giant's strong sales forecast and expansion in advanced packaging capacity indicating robust demand for AI chips, particularly those used by Nvidia. The increased capital expenditure by major cloud computing providers further supports the positive outlook for Nvidia's revenue growth in the new fiscal year. As Nvidia continues to benefit from the growing demand for AI chips and a strong supply chain, investors can remain optimistic about the company's growth prospects.