The AI market, despite recent murmurs of a slowdown, continues to show strength, according to prominent tech analyst Gene Munster. In a recent post on X, formerly Twitter, Munster emphasized the importance of looking at the broader AI landscape rather than getting caught up in short-term fluctuations. This reassurance comes on the heels of impressive third-quarter performance by Taiwan Semiconductor Manufacturing Company Ltd (TSMC), a key supplier for Nvidia, a major player in the AI chip market.
Just a few days ago, investor concerns about a potential AI slowdown arose after ASML Holding N.V., a key supplier of chip-making equipment, reduced its 2025 revenue forecast by 18%. The prevailing theory was that this decline in demand for AI chip-making machines could signal a broader slowdown in the AI chip market. However, TSMC’s recent results paint a different picture.
TSMC’s stock surged by 10% following the announcement of a 6% increase in December revenue projections. Additionally, the company reported that demand for CoWoS, a crucial technology used in AI applications, is exceeding its supply capabilities despite efforts to double capacity annually. Munster stated, “I still believe we’re in front of a 2-4 year bull market driven by AI.” He emphasizes that this scenario demonstrates why it’s crucial to focus on the larger AI picture rather than getting swayed by short-term market noise.
Munster’s optimistic stance is further supported by TSMC’s impressive third-quarter results, which surpassed expectations driven by robust demand for AI chips. The company reported revenue of NT$759.69 billion ($23.50 billion) for the quarter, marking a 39% year-over-year increase. This growth underscores the strong demand for advanced processor node technologies used in AI applications.
Previously, Munster addressed the market’s overreaction to ASML’s guidance cut, pointing out that only a small portion of ASML’s revenue is directly tied to AI demand. His perspective suggests that the AI market remains on track, with TSMC’s performance further reinforcing this outlook.
The market seems to agree with Munster’s assessment. As of Friday’s pre-market hours, major semiconductor ETFs and Invesco QQQ Trust, Series 1 (QQQ) were trading upwards. iShares Semiconductor ETF (SOXX) was up by 1%, Direxion Daily Semiconductor Bull 3X Shares (SOXL) was trading 3.20% higher, and SP Funds S&P World ETF (SPWO), which includes TSMC investments, was up by 1.54%.
TSMC’s strong performance and Munster’s continued optimism signal a promising future for the AI market. While short-term fluctuations may occur, the broader trend indicates continued growth and innovation driven by the increasing demand for AI chips and advanced technologies.