Chip stocks rally after TSMC's strong sales forecast calms growth worries

• Semiconductor stocks rose after TSMC's strong sales forecast.
• The bellwether chipmaker expects AI-product revenue to triple this year.

Taiwan Semiconductor Manufacturing Company has offered something of an antidote to the brief crisis of confidence that hit the chipmaker industry.

Two days after a broad semiconductor-stock sell-off driven by a light forecast from the Dutch firm ASML, chipmakers rallied on Thursday on TSMC's strong results. TSMC itself climbed as much as 13% in New York trading, while major industry players Nvidia, Broadcom, and Micron each rose roughly 4% at intraday highs.

The iShares Semiconductor ETF also rose as much as 3%.

TSMC's third-quarter earnings report saw the company increase its 2024 sales-growth forecast to 30%, up from previous projections of mid-20% expansion. The firm also said AI-product revenue would triple this year, making up 15% of the company's total revenue.

"The demand is real," CEO C.C. Wei said on the post-earnings conference call. "One of my key customers said, the demand right now is insane. It's just the beginning."

The results offer a sigh of relief for an industry that briefly panicked this week after ASML offered a far bleaker demand outlook.

TSMC is now up more than 100% year-to-date, trailing Nvidia's 182% climb but easily outpacing the iShares Semis ETF (21%) and the benchmark S&P 500 (23%) over the same period.