Taiwan Semiconductor Manufacturing Co (NYSE:TSM) stock trended on Friday after client Broadcom (NASDAQ:AVGO) revealed its quarterly results on Thursday.
- TSM is gathering positive momentum. See if it is worth your attention here.
Broadcom designs chips but relies on Taiwanese contract chipmaker Taiwan Semiconductor to manufacture them. Taiwan Semiconductor serves as Broadcom’s foundry in this partnership, producing its designs, including chips built for AI applications.
Also Read: Taiwan Semiconductor Investors Brush Off Export Setback As AI Spending Surges
Broadcom posted strong third-quarter results on Thursday, topping Wall Street estimates.
The company reported revenue of $15.95 billion, beating expectations of $15.83 billion, while adjusted earnings came in at $1.69 per share, above the $1.65 forecast. Revenue climbed 22% year-over-year, fueled by demand for custom AI accelerators, networking products, and VMware.
CEO Hock Tan highlighted that AI revenue surged 63% to $5.2 billion and projected to reach $6.2 billion in the fourth quarter, marking eleven straight quarters of AI growth.
Broadcom guided fourth-quarter revenue to about $17.4 billion, above the $17.02 billion consensus.
Tan confirmed a $10 billion custom chip agreement with a “major customer,” which the Financial Times identified as OpenAI. This signifies more business for contract chipmakers like Taiwan Semiconductor. Broadcom plans to begin production next year, with large-scale shipments set for 2026.
The deal follows the playbook of Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) and Amazon.com Inc. (NASDAQ:AMZN), which built proprietary processors to cut costs. OpenAI intends to use Broadcom’s chips to power ChatGPT’s 700 million weekly users.
Taiwan Semiconductor stock gained over 19% year-to-date, topping the PHLX Semiconductor Index’s 14% returns. The AI frenzy fueled demand for its chips, leading to the upside.
TSM Price Action: Taiwan Semiconductor shares were up 2.48% at $241.04 at the time of publication on Friday. The stock is approaching its 52-week high of $248.28, according to Benzinga Pro data.
Read Next:
Photo: Jack Hong on Shutterstock.com
