Taiwan Semiconductor Manufacturing Co. (TSMC), the world's leading producer of advanced chips for clients like Apple and Nvidia, saw its shares spike by nearly 10% during Thursday's trading following the announcement of a 54% increase in net profit for the third quarter. The company's financial results and future projections highlight the ongoing strength of the global semiconductor market, particularly in the realm of AI applications.

For the quarter ending in September, TSMC reported a net income of 325.3 billion New Taiwan dollars (approximately $10.1 billion), which exceeded the LSEG estimate of NT$300.2 billion. The company's net revenue reached $23.5 billion, marking a 36% year-over-year increase, with a gross margin expansion to 57.8% from 54.3% in the same period last year.

TSMC's financial officer, Wendell Huang, anticipates fourth-quarter revenue to range between $26.1 billion and $26.9 billion, indicating a midpoint increase of 13% sequentially and 35% year-over-year. This forecast underscores the company's confidence in its industry-leading 3nm and 5nm technologies, which are significantly bolstered by robust smartphone and AI-related demand.

TSMC's Chairman and CEO, C.C. Wei, emphasized in an earnings call that AI demand is not a passing trend but a "real" and substantial force driving the company's growth. He noted that TSMC's broad and deep experience in the industry positions it as a key partner for AI innovators and hyperscaler customers developing their own chips.

The company's shares listed in Taipei have experienced a meteoric rise of nearly 80% year-to-date, outperforming the broader market's 28.57% growth. TSMC now projects its capital expenditure for the year to exceed $30 billion, with Q3 capex costs rising to $6.4 billion.

TSMC's global manufacturing footprint is expanding to meet increased demand, with a significant $65 billion investment in three chip plants in Arizona and the opening of its first factory in Japan this year.

However, the company's earnings triumph comes amidst a broader market context that includes a downgraded sales forecast from ASML, its Dutch supplier, causing market volatility. Amidst debates on the sustainability of the AI boom and the returns on tech investments, key industry figures like Foxconn's Young Liu suggest that the AI evolution is far from over, with advanced language models continuing to evolve.