TSMC Reports 39.1% Surge in Q3 Net Profit
Beats Market Expectations, Lifts Other Semiconductor Stocks
Concerns Over U.S.-China Trade Tensions Persist
All three major U.S. stock indexes rose in unison on October 16 (local time) in New York. Despite concerns over escalating U.S.-China trade tensions, strong earnings from major banks and robust results from Taiwanese semiconductor company TSMC are fueling investor optimism about the artificial intelligence (AI) industry.
On the 16th (local time), a trader is working at the New York Stock Exchange (NYSE) trading floor in the United States. Photo by Reuters Yonhap News
As of 10:33 a.m. on the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was up 63.89 points (0.14%) at 46,317.2 compared to the previous trading day. The large-cap S&P 500 Index rose 23.79 points (0.36%) to 6,694.85, while the tech-heavy Nasdaq Composite climbed 152.048 points (0.67%) to 22,822.127.
TSMC's better-than-expected earnings report is spurring buying in technology stocks. The company announced that its third-quarter net profit for this year increased by 39.1% year-on-year to 452.3 billion New Taiwan dollars, surpassing the market consensus of 417.7 billion New Taiwan dollars compiled by LSEG. In addition, TSMC raised its 2025 revenue growth forecast from the previous 30% to the mid-30% range and reaffirmed its plan for capital expenditures totaling 42 billion dollars by the end of the year.
David Lefkowitz, Head of U.S. Equities at UBS Global Wealth Management, said, "The third-quarter earnings season will support our view that strong earnings growth combined with a potential rate cut by the Federal Reserve will sustain the bull market. This round of earnings will confirm that the AI investment spending boom remains robust, which will serve as another driver for the U.S. stock market's upward momentum."
However, some voices are cautioning against excessive reliance on AI optimism.
Adam Turnquist, Chief Technical Strategist at LPL, noted, "While there are still many rising stocks within the S&P 500, the gap is narrowing, which suggests cracks in the market's foundation. This could be resolved through broader market participation, but at the same time, it increases the concentration risk in a handful of leading stocks driving the rally."
Concerns over U.S.-China trade tensions persist.
On October 14, U.S. President Donald Trump strongly criticized China's suspension of U.S. soybean imports and mentioned the possibility of halting business in edible oil and other trade-related sectors. Subsequently, on October 15, U.S. Treasury Secretary Scott Besant announced plans for a joint response with allied nations to counter China's export controls on rare earth elements.
Additionally, the prolonged federal government shutdown is creating gaps in economic data, increasing uncertainty in monetary policy decisions.
U.S. Treasury yields are holding steady. The 10-year Treasury yield, a global benchmark, stands at 4.04%, while the two-year Treasury yield, which is sensitive to monetary policy, is around 3.5%, both remaining at levels similar to the previous day.
By stock, TSMC is down 0.45% despite its strong earnings. However, renewed AI optimism is boosting other semiconductor stocks, with Nvidia up 1.68% and Broadcom rising 2.82%. Salesforce surged 6.18% after projecting its 2030 revenue to exceed 60 billion dollars.
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