Broadcom (AVGO) saw its shares rise by 4.3% on Thursday, peaking at 4.9% during the day.
The increase was driven by strong earnings from Taiwan Semiconductor Manufacturing Co. (TSMC), a key player in the AI sector.
AI Demand Remains Strong
TSMC reported a 39% year-over-year revenue increase to 759.7 billion New Taiwan dollars (about $23.5 billion), surpassing analyst expectations. Their earnings per share rose 54% to $1.94. TSMC attributed its strong results to high demand for AI and smartphone chips and expects this trend to continue in the fourth quarter.
This contrasted with ASML, a lithography equipment maker, which lowered its 2025 forecast, causing concerns among investors.
Future Outlook
Broadcom produces essential products for data centers, vital for AI technology. The company’s strong performance led to a 10-for-1 stock split in July. They continue to see robust demand for AI networking and custom accelerators.
While there are worries about a slowdown in AI adoption, TSMC’s strong results suggest ongoing demand. Although Broadcom’s current PE ratio is high at 160, forecasts of $6.15 EPS in 2025 indicate a more reasonable price-to-earnings ratio of 28 for next year, appealing for a key AI infrastructure provider.
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