Key Takeaways
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- TSMC’s October revenue rose 16.9%, its slowest growth since February 2024, signaling potential moderation in AI chip demand.
- Global tech stocks sold off last week amid fears of overvaluation in the AI sector.
- Despite cooling momentum, Big Tech is boosting AI capital spending by over 21% next year, totaling $400 billion.
- Nvidia CEO Jensen Huang said business is growing “month by month,” after meeting with TSMC CEO C.C. Wei to secure more chip supply.
- Qualcomm and AMD echoed optimism, suggesting AI demand remains robust even as supply constraints persist.
TSMC’s Slowing Momentum
Taiwan Semiconductor Manufacturing Co. (TSMC) reported 16.9% year-over-year revenue growth in October, the weakest since early 2024.
Analysts expect fourth-quarter growth around 16%, suggesting the pace of AI-driven expansion may be normalizing after a year of breakneck acceleration.
TSMC shares remain up 37% year-to-date, underscoring strong investor confidence in its long-term AI role despite near-term deceleration.
Market Correction and Investor Caution
The slowdown comes as global tech equities faced a sharp selloff last week.
Wall Street CEOs have warned of “frothy” valuations and an overdue correction.
Notably, Michael Burry’s Scion Asset Management disclosed bearish bets against Nvidia, signaling skepticism over the AI boom’s sustainability.
Bloomberg’s analysis of recent trading shows institutional rotation away from AI-leveraged names toward defensive sectors, following months of exuberance.
Big Tech’s Continued AI Spending
Despite the correction, industry leaders remain committed to AI investment.
Meta, Alphabet, Amazon, and Microsoft are projected to collectively spend $400 billion in 2026, up 21% from 2025, to expand AI data centers and infrastructure.
“The world is underestimating how big AI will get,” said Cristiano Amon, CEO of Qualcomm, in a Bloomberg TV interview.
This aggressive CapEx growth reflects the long-term strategic race to secure compute power and leadership in generative AI, even as investors debate valuation excesses.
Nvidia and TSMC: Tight Supply Chain Dynamics
Nvidia CEO Jensen Huang, visiting Taiwan over the weekend, met TSMC CEO C.C. Wei to request additional chip production capacity.
Huang said Nvidia’s business was “growing month by month, stronger and stronger,” citing sustained AI accelerator demand.
TSMC remains the exclusive fabricator for Nvidia’s Blackwell chips and also produces silicon for AMD, Qualcomm, and Apple.
Wei confirmed that capacity remains tight, with TSMC working to close the gap between overwhelming demand and limited supply.
AI Optimism Meets Market Reality
Executives remain bullish that AI is still in its early innings, but investors are recalibrating expectations.
AI chip and infrastructure firms continue expanding, yet valuation multiples and revenue growth are decelerating.
The current phase may mark a transition from hype to normalization — with production scaling up while margins tighten.
