To The Moon

Boosted by strong progress in artificial intelligence infrastructure development before the outbreak of Middle East conflicts, Taiwan Semiconductor Manufacturing (TSM) recorded a 30% year-on-year increase in sales for the first two months of this year. The company stated on Tuesday that consolidated revenue for January and February rose to NT$718.9 billion (approximately US$22.6 billion). Analysts on average project a 33% revenue growth for the first quarter. Sales in February alone grew 22% compared to the same period last year, though the growth rate was affected by the Lunar New Year holiday in January 2025. As the primary chip manufacturer for Nvidia, AMD, and Broadcom, TSMC serves as a key indicator for the global AI industry. Market attention is now focused on how U.S. and Israeli strikes against Iran may influence the willingness of various parties to invest in data centers and other digital infrastructure. Alphabet, Amazon, Meta, and Microsoft have collectively allocated over US$650 billion in spending budgets for this year. However, warnings about potential overcapacity and uncertainties regarding the technology's path to commercial profitability persist. The construction cost of AI data centers can reach tens of billions of dollars and requires coordination with power generation companies, grid operators, suppliers, and creditors. According to a media report last week, Oracle and OpenAI have canceled plans to expand a flagship AI data center in Texas due to stalled financing negotiations and evolving demand from OpenAI.