The TSMC factory in Nanjing, Jiangsu province, China (CFOTO/Getty Images)

Chipping in

TSMC climbs on blowout sales, sees AI revenues doubling this year

AI-centric sales poised to keep booming and supply remains more of a constraint than demand.

1/16/25 8:44AM

TSMC, the world’s largest semiconductor producer, is jumping 5% in the premarket after posting stronger fourth-quarter results and a better outlook than analysts anticipated, saying that AI-centric revenues are poised to double this year after tripling in 2024.

Some highlights from the quarterly report and earnings call:

Adjusted earnings per share of $0.45 beat expectations.
Revenues of $26.8 billion were above all projections.
Even the low end of its guided ranges for revenues ($25 billion to $25.8 billion) and operating margins for Q1 (between 46.5% to 48.5%) exceeded the consensus estimate for these metrics.
TSMC plans to aggressively expand to accommodate the AI boom: full-year planned capex ranges from $38 billion to $42 billion, compared to an estimate of $35.2 billion.
- HPC (high-performance computing) sales, some of which are tied to the AI build-out, accounted for more than half of TSMC’s fourth-quarter revenues and posted the fastest sequential growth of any segment.
- So-called AI accelerators “accounted for close to mid-teens percent of our total revenue in 2024,” according to Chairman and CEO CC Wei, who expects these sales to double this year after tripling in 2024.
- Demand still exceeds supply: “We have very tight capacity and cannot even meet customers’ need,” Wei said. Later, on a question on whether there was more upside/downside to the expectation that AI-centric revenues would double in 2025, he suggested it was more a matter of supply than demand.
There’s still a big divide between AI and ex-AI demand. Per Wei: “2024 was a mixed year of recovery for the global semiconductor industry. AI-related demand was strong while our other applications saw only a very mild recovery, as macroeconomic conditions weigh on consumer sentiment and end-market demand.”
On trade and tariffs, particularly relevant to TSMC given it makes geopolitically sensitive materials and produces its most advanced products in a geopolitically fraught location:
- “Let me assure you that we have a very frank and open communication with the current government and with the future one also,” Wei said. “I cannot say anything more than that.”
- Export restrictions recently announced by the Biden administration are “not significant” and “manageable” for TSMC, the CEO added.
American customers matter most: North America accounted 75% of sales compared to just 9% for China (a share that slipped versus Q3).

Max Knoblauch & David Crowther11h

Nike’s China business declines for seventh straight quarter, stock sinks as soft guidance outweighs Q3 earnings beat

Sportswear kingpin Nike reported results for its third quarter, which ended in February, after the bell Tuesday. At a headline-level, the fiscal Q3 numbers were pretty solid, with Nike reporting:

Earnings of $0.35 per share, comfortably above the Wall Street consensus of $0.29 per share compiled by FactSet.
$11.28 billion in total revenue, roughly in line with the $11.26 billion estimate.

However, weakness in China and a revenue forecast that implies sales will continue to drop are weighing on the shares, which are down more than 9% in early trading on Wednesday.

On the earnings call, management said that revenue is expected to drop 2% to 4% in the coming quarter, and that overall they "expect revenues to be down low-single-digits versus the prior year, with gains in North America offset by declines in Greater China." That's a disappointment to analysts, who were anticipating 2% growth in the coming quarter, and even more in the latter stages of the year, per Bloomberg.

Nike’s sales in China — where the company earns about 15% of its revenue — fell 7% to $1.62 billion. That’s its seventh straight quarter of sales declines in the market, though this quarter’s was less than feared. The company had issued weak guidance for this quarter considering continued softness in the region.

“This quarter we took meaningful actions to improve the health and quality of our business,” said Nike CEO Elliott Hill. “The pace of progress is different across the portfolio and the areas we prioritized first continue to drive momentum.”

Nike shares are trading near decade lows this month, as tariffs continue to weigh on profits and shipping costs rise amid the war with Iran. As of Tuesday’s close, the stock was down 17% year to date.

Luke Kawa, Tasha Matsumoto

11h

Stocks end worst quarter since 2022 with best day since May

Optimism that the end of the war may be near sent stocks surging.

Max Knoblauch13h

Oil-sensitive travel stocks pop following Iran state media reporting on potential war resolution

Travel stocks are surging on Tuesday as oil prices fall following reports from Iranian state media that President Masoud Pezeshkian said the country has “the necessary will to end this war,” but would only do so with guarantees that “prevent the recurrence of aggression.”

The war has sent oil prices and refining margins surging this month, causing airlines and cruise lines to cut profit forecasts despite reported high demand.

Following Tuesday’s update, shares of the big four US airlines (Delta Air Lines, United Airlines, American Airlines, and Southwest Airlines) all climbed, along with smaller rivals including JetBlue. US airlines have stopped fuel hedging in recent years, increasing their exposure to upward swings in oil prices.

Cruise stocks also rallied, with Carnival and Norwegian up more than 6% and Royal Caribbean up about 5%.

J. Edward Moreno16h

The FDA is expected to lift restrictions on certain peptides, the NYT reports

The Food and Drug Administration is expected to lift restrictions on certain peptides, allowing the experimental, often injectable substances to be sold by compounding pharmacies, The New York Times reported Tuesday.

The potential move was previously reported by The Wall Street Journal, and teased by Health Secretary Robert F. Kennedy Jr. on the “Joe Rogan Experience” podcast in late February.

Peptides have boomed in popularity recently, with search interest for “peptides” surpassing “ozempic” this month. Many of them are currently understudied and not approved for human use, a rule consumers are able to bypass by purchasing them from suppliers that sell them for, ostensibly, research purposes only.

As reports of the FDA changing its stance of peptides mount, consumer health companies like Hims & Hers and Superpower have been getting ready to roll out their peptide offerings as soon as they get the FDA's blessing.

The peptide gold rush: How impending deregulation could supercharge a shadow industry

Matt Phillips17h

Memory stocks bounce as Bernstein analyst calls TurboQuant fears “overdone”

Memory stocks rose Tuesday, after Bernstein analysts called the recent panic over Google’s TurboQuant AI algorithm “overdone.”

Bernstein analyst Mark Newman wrote:

“[Hard disk drive] and Memory stocks have sold off significantly due in part to fears from Google’s TurboQuant report. This however, should have zero impact on HDD demand and negligible impact on NAND demand. Given the stock sell-off we see this as an attractive entry point for Seagate Technology Holdings, Western Digital and Sandisk’s and upgrade WDC to Outperform.”

All three stocks were up early Tuesday, as was memory chip maker Micron.

Today’s rally stands in stark contrast to the pummeling these shares have endured over the last week, after Google Research published a technical paper on March 24 detailing its TurboQuant AI algorithm, which compresses the amount of data associated with AI operations without affecting the accuracy of AI models.

That was seen as a threat to surging AI demand for memory storage, which has supercharged prices for memory chips and memory-related stocks over the last year.