According to the Intelligence Finance and Economics APP, Taiwan Semiconductor (TSM.US) announced a 39% increase in quarterly revenue, better than expected, easing concerns about the reduction in spending on artificial intelligence hardware.

The major chip manufacturers Nvidia (NVDA.US) and Apple (AAPL.US) reported sales of 759.7 billion New Taiwan Dollars (23.6 billion US Dollars) for the September quarter, higher than the analyst average expectation of 748 billion New Taiwan Dollars. The company is set to announce its third-quarter performance next Thursday.

Taiwan Semiconductor is one of the key companies globally experiencing a surge in spending on artificial intelligence development, producing cutting-edge chips needed for training artificial intelligence. Since 2020, its sales have more than doubled, and the groundbreaking launch of ChatGPT sparked a race to purchase Nvidia's artificial intelligence server hardware.

However, in recent months, there has been a divergence of views on whether the momentum of artificial intelligence-driven growth will continue.

Some investors warn that without convincing and profitable artificial intelligence use cases, companies like Meta (META.US) and Google (GOOGL.US) cannot sustain their current pace of infrastructure spending. This skepticism led to a decline earlier this year in artificial intelligence stocks, including industry leader Nvidia.

Nevertheless, since the launch of ChatGPT, Taiwan Semiconductor's stock price has more than doubled, and its market cap briefly exceeded the $1 trillion mark in July. That month, after surpassing expectations for the quarter, the chip foundry also raised its revenue growth expectations for 2024.

This increase highlights the view of Taiwan Semiconductor that although geopolitical tensions are escalating, spending on artificial intelligence will remain high.

Some analysts are concerned that the delayed delivery of NVIDIA's latest Blackwell chip may disrupt the industry, but most investors do not see this as a long-term issue for Taiwan Semiconductor. With Intel (INTC.US) and Samsung Electronics (SSNLF.US) both struggling in the custom chip manufacturing business, Taiwan Semiconductor's expected market leadership position is likely to boost its profit margin.

NVIDIA's key server assembly partner, Hon Hai Precision (Foxconn), earlier this week also reiterated that demand for artificial intelligence hardware remains strong. Hon Hai Chairman Liu Yangwei stated in an interview on Tuesday that the company plans to increase server capacity to meet the "crazy" demand for the next generation of Blackwell chips, echoing similar remarks made earlier this month by NVIDIA CEO Huang Renxun.

Bloomberg Intelligence analyst Charles Shum: "While Apple's A18 chip orders may decline due to soft demand for the new iPhone 16, strong orders from NVIDIA and Intel may offset any revenue gap for Taiwan Semiconductor. Other key themes include the potential of early production at the 2-nanometer (N2) node, and plans to expand its CoWoS packaging capacity in 2025."

Currently, over half of Taiwan Semiconductor's revenue comes from high-performance computing, driven by artificial intelligence demand. Despite increasing concerns among analysts about lower-than-expected demand for the new iPhone 16 series, it remains the sole manufacturer of iPhone processors.