TSMC reports third-quarter results on Oct. 15, while Nvidia likely won't report until November. The Motley Fool's Daniel Sparks argues the TSMC numbers offer the best early look at Nvidia's next quarter, though they cover the whole AI chip market and cannot settle the case for the stock.
TSMC reports its third-quarter results on Thursday, Oct. 15, and the Motley Fool's Daniel Sparks calls it the best early look investors will have at Nvidia's next quarter. Nvidia likely won't post its fiscal third-quarter results until November.
TSMC has guided for third-quarter revenue of $44.6 billion to $45.8 billion. At the midpoint, that would be 12% higher than the second quarter and 37% more than a year before.
TSMC's quarter overlaps most of Nvidia's
TSMC's quarter ran from July through September, covering around two of the three months in Nvidia's fiscal quarter. Monthly sales through August already pointed to a strong quarter: July revenue rose around 45% year over year in New Taiwan dollars, and August revenue climbed about 53%.
Nvidia has guided for about $108 billion in fiscal third-quarter revenue, plus or minus 2%. Hitting that figure would put growth around 89% over the $57.0 billion it posted a year before, a slowdown from 106% in fiscal Q2.
What TSMC's report cannot show
However, TSMC doesn't say how much of its revenue comes from Nvidia. Its AI figures also lump Nvidia in with competitors, so part of any jump may come from custom chips designed by other companies.
The report also can't show what Nvidia charges for its systems. Nvidia's gross margin was 75% last quarter, and that figure depends on Nvidia's pricing much more than on how many wafers TSMC ships.
Two TSMC numbers to watch
Sparks would first watch high-performance computing, which made up 66% of TSMC's second-quarter revenue, compared to 61% in the first quarter. Another double-digit sequential gain may suggest the demand behind Nvidia's $108 billion guidance is holding up.
Packaging capacity is the second. In July, TSMC Chairman and CEO C.C. Wei said on the earnings call: "packaging capacity is so tight that now it limits my customers' growth".
Sparks writes that Nvidia shares trade near $237, about 15 times expected earnings for the fiscal year ending in January 2028. He says the stock looks reasonably priced for a business still guiding for growth around 90%.
Source: The Motley Fool
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