Nvidia’s results reinforce continued AI growth for Taiwan Semiconductor

Nvidia’s (NASDAQ:NVDA) strong results and guidance reinforce that Taiwan Semiconductor (NYSE:TSM) should keep benefiting from artificial intelligence-linked growth for some time, analysts said.

“The results underscore robust structural Al demand, with limited digestion periods as adoption accelerates,” Bank of America analyst Brad Lin wrote in a note to clients. “NVIDIA’s intact one-year cadence for datacenter GPU development is particularly favorable for TSMC, supporting [average selling price] content growth. The continuous scaling of Al models strengthens TSMC’s leading-edge node demand and industry leadership.”

Lin, who has a Buy rating on Taiwan Semi, added Nvidia’s “robust” gross product margin outlook for next year is a reflection of the strong value that Taiwan Semiconductor offers to its clients. And with Nvidia continuing to accelerate its product pace, this bodes well for Taiwan Semi.

“Accelerated product launches enhance visibility for TSMC’s [average selling price] growth and supply chain dynamics,” Lin added. “These developments, combined with tight supply chain conditions and Al-driven demand scaling, further strengthen TSMC’s strategic position in the industry, in our view.”

Citi analyst (Chia Yi) Chen echoed those thoughts and said that Taiwan Semiconductor is looking to double its chip-on-a-wafer-substrate capacity again in 2025, with Nvidia being the biggest contributor to the foundry’s AI business.