The dark clouds of war cannot hide the AI boom. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) reported a Q1 revenue that exceeded expectations, with a growth of 35%.

Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) announced on Friday that its latest quarterly revenue increased by 35%, indicating that the demand for artificial intelligence (AI) chips remained stable in the initial weeks of the outbreak of the Middle East conflict. The major chip manufacturer for NVIDIA Corporation (NVDA.US) and Apple Inc. (AAPL.US) stated that their revenue for the three months ending in March reached 1.13 trillion New Taiwan Dollars (approximately 35.6 billion US dollars), higher than the analyst average expectation of 1.12 trillion New Taiwan Dollars. Sales increased by 45% in March. This report may help alleviate concerns in the market that the long-term conflict in the Middle East may suppress demand for high-energy AI data centers and devices such as iPhones. The current conflict has already put pressure on global shipping routes and energy prices, and investors are closely watching whether its impact will affect the spending plans of tech giants. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR and its AI customers (such as NVIDIA Corporation) also face doubts from the outside world about whether they can maintain their current growth rate. After NVIDIA Corporation became the world's most valuable company with explosive sales growth and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR became the most valuable company in Asia, investors urgently need assurances that the AI spending boom can continue. Earlier, the world's largest electronics contract manufacturer, Hon Hai Precision (Foxconn), as well as NVIDIA Corporation, the largest server producer, also announced strong sales data, with first-quarter revenue growing by 30% year-on-year. Analyst Charles Shum said, "Given the strong demand for 3-nanometer and 5-nanometer processes used for AI accelerators and network chips, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's first-quarter performance may exceed guidance midpoints and market expectations. Favorable appreciation of the US dollar against the New Taiwan Dollar will also provide further support. We expect gross margins to reach at least a historical high of 65%." Shum added, "The focus of the financial results conference call is expected to be on management's views on demand for Android smartphones and PCs (especially whether rising memory costs will trigger a new round of inventory adjustments); wafer factory operations, and whether profit margins in the second half of the year will be under pressure due to interruptions in chemical or energy supply, or rising costs. Another point of interest is whether the continuous demand for AI chips over the years and the advantage of advanced processes are sufficient to support raising the long-term gross margin target to above 58%." Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR is scheduled to announce its full first-quarter results on April 16. The chip fabrication giant manufactures the most advanced semiconductors globally and serves as a major beneficiary in the global competition to build AI infrastructure, providing services to companies like NVIDIA Corporation, AMD (AMD.US), and Broadcom Inc. (AVGO.US). The stock price of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR has risen nearly 30% this year, outperforming its major clients. However, even after Alphabet Inc. Class C (GOOGL.US), Amazon.com, Inc. (AMZN.US), Meta (META.US), and Microsoft Corporation (MSFT.US) set aside $650 billion for AI spending this year, large tech companies have struggled to meet investors' high expectations. While NVIDIA Corporation, as a global leader in AI chips, saw quarterly revenue surge by 73% and gave performance outlook beyond expectations, its stock price still declined by 1.4% this year.