Nvidia, AMD and Intel were lower in Thursday’s premarket trading even after TSMC delivered record sales, underscoring the tension between booming AI demand and tougher valuation conditions.
TSMC reported third-quarter revenue of NT$1.49 trillion, or $46.71 billion, up 50% year on year and above analysts’ NT$1.46 trillion estimate.
September sales jumped 54.6%. Yet Nvidia and AMD were down about 0.8% and 1.7%, while Intel also slipped over 2% as Treasury yields and oil prices climbed. Stronger chip demand is no longer enough on its own.
TSMC gave chip bulls another $46.7B reason to stay optimistic
TSMC’s quarter offered little evidence that the AI infrastructure cycle is losing momentum.
Revenue exceeded the top of the company’s $44.6 billion to $45.8 billion guidance range, while September sales reached NT$511.86 billion.
TSMC manufactures chips for Nvidia, AMD and other major designers, making its sales a direct indicator of leading-edge AI demand.
Wedbush analyst Matt Bryson said the gap between Nvidia’s growth prospects and valuation was becoming “increasingly difficult to ignore.”
Nvidia trades at less than 20 times forecast next-year earnings, while analysts expect earnings growth of roughly 70%.
That helps explain why bulls remain confident even after the company approached a $6 trillion valuation.
Agentic AI is making the boom broader than Nvidia
The next phase of AI spending may increasingly involve CPUs, memory and networking alongside GPUs.
Citi analyst Atif Malik argues that always-on AI agents could create far more compute demand than traditional chatbots because they continuously handle inference, data preparation, security and orchestration.
“We view agentic AI as a potential orders-of-magnitude driver of compute demand relative to traditional chatbots,” Malik said, according to Barron’s.
Citi raised its AMD price target to $800 from $575 and expects the CPU market to expand towards roughly $300 billion by 2030. AMD could be a major beneficiary as customers such as Meta deploy more agentic workloads.
Nvidia remains dominant in accelerators, but growing AI-agent adoption can simultaneously increase demand for AMD and Intel server CPUs, memory and networking hardware.
The question is becoming less about which chipmaker wins and more about how much total compute AI ultimately consumes.
Better fundamentals are colliding with 5% Treasury yields
Intel also has a route into this broader demand cycle. Mizuho analyst Vijay Rakesh estimates agentic AI could account for roughly 30% of server CPU units by 2030.
Mizuho raised its Intel target to $114 from $92 while maintaining a Neutral rating, saying stronger CPU demand is “lifting all boats.”
That matters because Intel can benefit from expanding server demand even if AMD continues taking share.
The problem is valuation, as the US 10-year Treasury yield remained above 5.3% on Thursday, while Brent crude climbed above $104 as geopolitical tensions pushed energy prices higher.
Rising yields increase the return investors can earn without taking equity risk and reduce the present value assigned to future profits.
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