The optimistic expectations for artificial intelligence are moderating. Microsoft (MSFT) pulled back from its nearly $470 high reached in July. It closed at $416.72.
While the software-related AI companies are trading lower, markets are picking the winners. Taiwan Semiconductor (TSM) gained 9.79% after posting strong Q3 results. Revenue grew by 36.0% Y/Y to $23.5 billion. TSM reported 5 nm accounting for 32% of its revenue.
Looking ahead, TSM expects an increase in capital expenditures, due to AI-related demand. CFO Wendell Huang said that AI-related demand continued. To support its customer’s growth, it will invest in the business.
TSM is expecting growth over the next few years. The increase in capital expenditure would benefit equipment makers. This includes KLA (KLAC), Applied Materials (AMAT), and ASML (ASML). On Thursday, ASML stock rebounded but AMAT and KLAC stock did not. Lam Research (LRCX) also fell slightly.
Risks
Speculators might blindly buy TSM, Intel (INTC), and Advanced Micro Devices (AMD). However, customers building AI have yet to validate a positive return on investment. Only the chip suppliers benefit from the AI boom. If corporations fail to use AI to cut operating costs, raise efficiency, and boost sales, they may cancel their projects.
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