Geopolitical Tensions and the 'Silicon Shield': Why Taiwan Semiconductor Manufacturing Company (TSM) Remains a Tech Titan

Taiwan's semiconductor industry sits at the crossroads of global technology and geopolitics. As the world becomes increasingly reliant on advanced chips for everything from smartphones to artificial intelligence, Taiwan Semiconductor Manufacturing Company Limited (TSM) has emerged as the critical node in this ecosystem. However, recent geopolitical tensions surrounding Taiwan, combined with rising global demand, have spotlighted TSMC's delicate yet dominant position in the technology supply chain. As nations prioritize supply chain resilience, TSMC's role becomes ever more significant—both as a technological leader and a symbol of geopolitical strategy often referred to as Taiwan's "Silicon Shield."

TSMC’s Unmatched Market Position

TSMC is the world's largest semiconductor foundry, producing chips for tech giants such as Apple Inc. (AAPL), NVIDIA Corporation (NVDA), and Advanced Micro Devices, Inc. (AMD). It controls over 60% of the global semiconductor market, a staggering figure that grows even more critical when isolating advanced chips. In the third quarter of 2024, 3-nanometer and 5-nanometer chips accounted for 52% of TSMC's wafer revenue, showcasing its dominance in cutting-edge technology. TSMC’s ability to manufacture at such precision and scale is unmatched, solidifying its position as the backbone of the modern tech world.

Demand for TSMC's chips remains robust, particularly in high-performance computing (HPC) and smartphones, which comprised 51% and 34% of its Q3 2024 revenue, respectively. The rise of artificial intelligence, driven by surging demand for GPUs and AI accelerators, has further cemented TSMC's relevance. Its advanced node technologies are essential for AI training and inference workloads, making the company indispensable to the development of generative AI models and future technological breakthroughs.

Beyond its dominance in cutting-edge technologies, TSMC's ability to attract customers across sectors—from automotive to IoT—positions it as a diversified yet focused enterprise. Its broad customer base mitigates the risk of over-reliance on any single industry, contributing to its financial stability and competitive advantage.

The Geopolitical Pressures: Risk and Opportunity

The geopolitical backdrop for TSMC has grown increasingly complex. Tensions between China and Taiwan raise concerns about potential disruptions in the global chip supply chain. Given Taiwan's strategic importance—producing more than 90% of the world’s most advanced chips—the consequences of any disruption would ripple across industries worldwide. As semiconductors underpin critical sectors like defense, healthcare, and energy, the global economy's reliance on TSMC underscores Taiwan’s geopolitical significance.

In response, both the United States and Europe have made semiconductor self-sufficiency a strategic priority. The U.S. CHIPS Act, providing subsidies and incentives for domestic chip production, reflects these efforts to reduce dependency on Taiwan. Yet, despite global efforts, replicating TSMC's scale and expertise remains a colossal challenge. Establishing semiconductor fabs demands years of investment, advanced engineering capabilities, and skilled labor—areas where TSMC already holds an intractable lead.

The geopolitical tensions also create opportunities for TSMC. As nations prioritize securing semiconductor supply chains, TSMC’s technological edge positions it as the go-to partner for governments and corporations alike. Its unparalleled expertise allows it to extract significant value while collaborating with international stakeholders to ensure stability in chip production.

Diversifying Away from Geopolitical Hotspots

To address geopolitical uncertainty, TSMC has embarked on a strategy to diversify its manufacturing locations. Projects in the United States, Japan, and Germany are part of this effort to ensure operational continuity while addressing concerns about geographic concentration.

In Arizona, TSMC’s investment in a multi-fab project marks a significant step toward global expansion. Its first fab, focusing on 4-nanometer technology, is set to begin production in early 2025. This is part of a larger initiative that will eventually include 3-nanometer production, bolstering TSMC’s ability to serve American customers. Meanwhile, in Japan, TSMC’s facility in Kumamoto started volume production in Q3 2024, targeting specialty technologies crucial for automotive and industrial applications. Land preparation for a second Kumamoto fab is underway, with production expected by 2027.

Europe has also become a focal point in TSMC's diversification strategy. A fab in Dresden, Germany, is under construction and will cater to automotive and industrial chip demand. While overseas fabs come with higher costs—including labor, energy, and material expenses—TSMC’s leadership believes these investments will enhance its long-term resilience. To offset higher costs, TSMC relies on its technological leadership and economies of scale, ensuring that its operations remain efficient and cost-effective compared to competitors.

Financial Performance: A Testament to Strength

TSMC's recent financial results underscore its operational excellence and growth potential. In Q3 2024, TSMC reported revenue of NT$759.7 billion ($23.5 billion), a 39% year-over-year increase. Net income rose to NT$325.3 billion, up 54.2% year-over-year, with a net profit margin of 42.8%. These figures reflect robust demand for TSMC's advanced process technologies, particularly 3nm and 5nm chips, as well as the company’s ability to optimize costs and increase capacity utilization.

The company’s financial outlook for Q4 2024 remains strong, with projected revenue between $26.1 billion and $26.9 billion and a gross profit margin between 57% and 59%. TSMC’s annualized return on equity (ROE) reached 33.4% in Q3 2024, highlighting its ability to generate substantial value for shareholders. While overseas expansion will temporarily dilute gross margins by 2-3%, TSMC’s consistent cash flow generation and disciplined capital allocation ensure it remains on solid financial footing.

Capital expenditure for 2024 is expected to exceed $30 billion, with 70-80% allocated to advanced technologies. This level of investment highlights TSMC’s commitment to maintaining its technological edge in an increasingly competitive landscape. By reinvesting profits into research, development, and capacity, TSMC ensures it remains ahead of competitors in delivering next-generation semiconductor technologies.

Investment Perspective: The Case for TSMC

Despite geopolitical concerns, TSMC's leadership in semiconductor manufacturing makes it a compelling investment opportunity. The growing demand for AI, smartphones, and high-performance computing ensures long-term growth for the company. Additionally, its proactive approach to diversifying manufacturing locations reduces exposure to geopolitical risks. The strategic balance between overseas expansion and technological innovation reinforces TSMC’s ability to navigate challenges while capitalizing on opportunities.

For investors, TSMC offers strong financial performance, robust demand outlook, and strategic positioning in a world increasingly dependent on advanced semiconductors. While geopolitical tensions pose risks, TSMC's dominance in leading-edge chip production and its global diversification efforts make it a resilient tech titan in uncertain times. With record-breaking earnings, solid margins, and a promising future driven by AI and advanced technologies, TSMC remains a cornerstone investment for those seeking exposure to the semiconductor industry’s exponential growth.

Semiconductor Shortages Easing: Is Intel (INTC) Set for a Comeback in 2025?

The semiconductor industry, often called the backbone of modern technology, has faced significant upheaval over the past few years. Supply chain disruptions triggered by the pandemic and skyrocketing demand from sectors like AI and electric vehicles led to what was termed "The Great Chip Shortage." However, recent developments suggest a turning tide. Supply chain stabilization and investment in manufacturing capacity are driving optimism across the industry.

Intel Corporation (INTC), a legacy giant in semiconductors, is at a critical juncture. While it has faced stiff competition from players like Advanced Micro Devices, Inc. (AMD) and NVIDIA Corporation (NVDA), it is making bold investments in product innovation and manufacturing. Could 2025 mark the start of a new era for Intel as the industry normalizes?

Market Context: The End of the Shortage?

Global semiconductor sales showed a strong recovery in the second half of 2023, reaching $527 billion. In 2024, the industry witnessed a balancing of supply and demand, with manufacturers like Taiwan Semiconductor Manufacturing Company (TSM) reporting surging profits driven by AI server processors.

The supply chain disruptions that plagued the sector are also abating. Governments have introduced measures to bolster domestic production, such as the U.S. CHIPS Act, which allocated $500 million to supply chain diversification efforts. Intel has been a significant beneficiary, securing $3 billion in government funding under the Secure Enclave program.

While AI-driven demand remains robust, segments like automotive and mobile chips have yet to recover fully. However, projections suggest a broader recovery by 2025, aligning with Intel's long-term strategy.

Intel’s Market Position: A Rebuilding Phase

Intel’s Q3 2024 financials reflect a company in transition. While revenue stood at $13.3 billion, a year-over-year decline of 6%, the company made strides in cost reduction, targeting $10 billion in savings by 2025. Its focus on innovation, particularly the Intel 18A process node, signals a push to regain process leadership. Products like Panther Lake for clients and Clearwater Forest for servers are scheduled for launch in 2025, positioning Intel to compete more aggressively.

Additionally, Intel's x86 Ecosystem Advisory Group, established with AMD and other industry leaders, aims to foster software development and hardware interoperability. Intel's new AI-focused products, such as the Xeon 6 and Core Ultra processors, highlight its ambition to dominate the AI PC category, a market it expects to ship 100 million units by 2025.

Investment Case: Growth Drivers and Tailwinds

As the chip shortage dissipates, Intel's investments in foundry capabilities and cutting-edge technology could yield substantial gains. The company’s partnership with Amazon Web Services (AWS) to develop custom Xeon chips underscores its foundry business potential.

Moreover, Intel’s government funding and alignment with global supply chain initiatives may insulate it from geopolitical risks while enabling it to scale domestic production. If Intel can capitalize on its upcoming launches, particularly in AI and advanced computing, it may capture significant market share.

However, macroeconomic conditions and evolving tech demands will play a critical role. Industry forecasts suggest global semiconductor sales may exceed $600 billion in 2024, with long-term growth driven by AI, electric vehicles, and 5G. Intel's ability to adapt to these trends will determine its trajectory.

Competition and Operational Challenges

Intel’s road to recovery is fraught with challenges. Competitors like Nvidia and AMD continue to set benchmarks in performance and innovation. Nvidia’s recent gains in AI server processors and AMD’s edge in chip architecture present formidable obstacles.

Operationally, Intel’s restructuring has been costly, with $15.9 billion in impairment charges affecting profitability. Manufacturing delays and market dynamics could further hinder the rollout of its 2025 product roadmap.

Moreover, geopolitical risks, including U.S.-China tensions, may disrupt global supply chains. As Intel aims to diversify its manufacturing footprint, these challenges remain a significant wildcard.

Investor Outlook: What Should You Do?

For investors, Intel represents a blend of risk and opportunity. The easing of the semiconductor shortage and Intel’s strategic investments suggest a potential upside. However, persistent competition and operational hurdles mean the stock may require patience.

Consider Intel if you have a long-term horizon and believe in its capacity to leverage innovation and supply chain resilience. Keep an eye on key milestones like the 2025 launch of Panther Lake and Clearwater Forest and monitor its financial health for signs of sustainable growth.

AMD and GOOGL Pull Back from Highs—Here’s Why It’s Time to Buy

The recent market volatility has created a golden opportunity for investors eyeing two tech giants: Alphabet Inc. (GOOGL) and Advanced Micro Devices, Inc. (AMD). Both companies have seen their stock prices fall considerably from their recent highs. While that might seem worrying, this dip offers an attractive entry point for investors, especially given the long-term growth potential of both companies, driven by advancements in artificial intelligence (AI) and data centers.

With that in mind, let’s explore the fundamentals of these stocks in detail:

Alphabet Inc. (GOOGL)

With a current market cap of $2.04 trillion, Google’s parent company is known for its pioneering internet-related services and products. While the stock has been weighed down by antitrust concerns, many investors are overlooking the company’s long-term growth prospects and strong financials. GOOGL’s valuation particularly looks quite attractive, when you consider its strong financial performance.

In the fiscal 2024 second quarter ended June 30, 2024, GOOGL reported revenues of $80.74 billion, up 13.6% year-over-year. Its income from operations grew 25.6% from the prior year’s quarter to $27.43 billion with a margin of 32%. The company’s biggest revenue driver continues to be its Google Advertising segment, which brought in $64.62 billion. But that’s not the only bright spot.

Google Cloud, which ranks as the third-largest cloud service provider, is expanding at a rapid pace. Cloud revenue surged 29% year-over-year to $10.3 billion, far outpacing the company’s overall growth. As more businesses adopt Google Cloud, particularly for AI-related purposes, this segment could become a larger piece of the pie over time. Furthermore, the company owns the two most popular websites: Google and YouTube, both of which are expected to fuel revenue growth over the long term.

On the bottom line, its net income and earnings per share came in at $23.62 billion and $1.89, representing increases of 28.6% and 31.3% year-over-year, respectively. Its EPS came above the analysts’ estimate of $1.84 by 2.5%. In addition, the tech company’s cash and cash equivalents amounted to $27.23 billion as of June 30, 2024, compared to $24.05 billion as of December 31, 2023.

Street expects GOOGL’s revenue and EPS for the fiscal third quarter (ended September 2024) to increase 12.5% and 18.7% year-over-year to $86.26 billion and $1.84, respectively. Also, the company has topped the consensus EPS and revenue estimates in all four trailing quarters.

GOOGL declined about 13% below its 52-week high. The stock is currently trading at a forward price-to-earnings (P/E) ratio of 21.72, which is a 15.2% discount to its own 5-year average. Besides, GOOGL’s trailing-12-month EBITDA margin of 35.18% is 93.2% higher than the 18.21% industry average. Likewise, the stock’s trailing-12-month net income margin, ROCE, and ROTC of 26.70%, 30.87%, and 20.34% compare to the industry averages of 3.08%, 3.44%, and 3.72%, respectively.

Despite the stock’s recent drop and ongoing regulatory concerns, the company’s long-term potential remains strong. Over the past year, the stock has climbed more than 23% and is up nearly 18% so far in 2024. With a projected upside of 21.8%, GOOGL currently has a consensus rating of “Strong Buy.” This dip offers a great opportunity for investors to scoop up shares at a discount ahead of the tech giant’s Q3 earnings report, expected in late October.

Advanced Micro Devices, Inc. (AMD)

Based in Santa Clara, California, Advanced Micro Devices has been at the forefront of innovation in high-performance computing, graphics, and visualization technologies. The company has firmly established itself as a formidable player in the GPU market, particularly excelling in chips tailored for AI workloads.

As AMD gains significant momentum in the data center space, there is strong potential for its current $262 billion valuation to grow even further. Despite the recent 25% dip in its stock price, AMD’s long-term growth prospects remain robust, offering a prime opportunity for investors to buy in at a discounted price.

AMD’s influence, however, extends beyond hardware. The company has been expanding its presence in AI software as well. In June, AMD introduced its groundbreaking Ryzen™ AI 300 Series processors, which are equipped with the world’s most powerful Neural Processing Unit (NPU). These processors are designed to bring AI capabilities directly to next-generation PCs, enabling AI-infused computing to seamlessly integrate into everyday tasks and applications. Additionally, the next-gen AMD Ryzen™ 9000 Series processors for desktops solidify AMD’s position as a leader in performance and efficiency for gamers, content creators, and prosumers alike.

Moreover, the company has outlined a comprehensive roadmap for its Instinct accelerator series, promising to deliver cutting-edge AI performance and memory capabilities across each generation. With the imminent release of the AMD Instinct MI325X accelerator in Q4 2024 and the upcoming launch of the MI350 series, powered by AMD’s new CDNA™ 4 architecture in 2025, AMD is poised to deliver up to a 35x increase in AI inference performance compared to its previous iterations.

In the second quarter that ended June 30, 2024. AMD’s non-GAAP revenue increased 9% year-over-year to $5.84 billion. Its data center revenue surged 115% year-over-year to $2.83 billion, accounting for nearly half of its total revenue.

The Mi300 series brought in over $1 billion in quarterly revenue for the first time, with its customer base expanding as Microsoft became the first cloud provider to offer general availability for the Instinct Mi300X. As AI applications continue to drive demand for high-performance data center solutions, AMD is well-positioned to see its profitability climb, given the higher margins typically associated with this segment.

Moreover, the company’s non-GAAP operating income grew 18.4% from the year-ago value to $1.26 billion. AMD’s non-GAAP net income and EPS stood at $1.13 million and $0.69, up from $948 million and $0.58, respectively, recorded last year.

Analysts expect its revenue and EPS for the current year (ending December 2024) to increase 12.9% and 27.7% year-over-year to $25.61 billion and $3.38, respectively. If AMD can exceed expectations, the stock could experience significant gains in the coming months. Earlier this year, the company projected $4 billion in AI chip sales for 2024, representing about 15% of its expected revenue.

AMD’s trailing-12-month EBITDA and net income margins of 17.38% and 5.82% are 72.3% and 56.2% above their respective industry averages of 10.09% and 3.72%. After a nearly 30% decline from its 52-week high, AMD is trading at 47.21x forward non-GAAP P/E, which is reasonable considering its AI prospects. Moreover, with the stock already up 57% over the past year, there’s potential for even more significant gains in 2025 and beyond. Thus, investors looking for long-term growth might consider this as a strategic entry point before the market fully prices in its potential.

Taiwan Semiconductor's 10% Dip: Is It Time to Buy?

With a $897.58 billion market cap, Taiwan Semiconductor Manufacturing Company Limited (TSM) plays a crucial role in the global semiconductor ecosystem by leading in the production of advanced chips used across several industries, including consumer electronics, automotive, telecom, and artificial intelligence (AI).

As one of the world’s largest independent semiconductor foundries, TSM’s expertise in advanced process technologies, such as 3nm and 5nm nodes, has made it a critical supplier for major tech companies, such as NVIDIA Corporation (NVDA), Advanced Micro Devices, Inc. (AMD), and Apple Inc. (AAPL).

Recently, the stock has dipped by around 10% from its all-time highs, making many investors wonder whether this pullback offers a prime buying opportunity. Let's assess whether long-term investors should capitalize on TSMC’s discounted price.

TSMC’s Technological Leadership

Taiwan-based TSMC’s role in advancing manufacturing chip technology has solidified its position as a critical player in the high-tech ecosystem, particularly in industries such as AI, 5G, automotive, and data centers. One of the company’s greatest strengths is its leadership in advanced node technology.

As a global chip leader, TSM provides the most advanced and comprehensive portfolio of dedicated foundry process technologies, including A16, 2nm, 3nm, 5nm, 7nm, and more. The company’s 3nm process is the industry’s leading semiconductor technology, providing the best power, performance, and area (PPA) and represents a full node advance from the 5nm generation.

TSMC continuously expands its 3nm technology portfolio to cater to diverse customer needs. Last year, the chip giant added new members to its industry-leading 3nm technology family, including the N3X process, designed specifically for high-performance computing (HPC) applications, and N3AE, facilitating an early start for automotive applications on the most advanced silicon technology.

Moreover, TSMC’s 2nm technology employing nanosheet transistors continues to make significant progress in terms of yield and device performance and is expected to commence production in 2025.

Earlier this year, at its 2024 North America Technology Symposium, TSMC introduced its latest semiconductor process, advanced packaging, and 3D IC technologies, showcasing its silicon leadership in driving the next generation of AI innovations.

With TSMC's cutting-edge N3E technology now in production and N2 slated for production in the second half of 2025, the company unveiled A16, the next technology in its roadmap. A16, set for production in 2026, integrates TSMC’s Super Power Rail architecture with nanosheet transistors. It enhances logic density and performance by allocating front-side routing resources to signals, making it well-suited for HPC products.

Also, the chip company introduced its System-on-Wafer (TSMC-SoW™) technology, a groundbreaking solution designed to deliver exceptional performance to the wafer level in addressing the future AI needs of hyperscaler data centers.

TSMC Surpasses Second-Quarter Earnings Expectations Amid AI Chip Boom

TSMC’s revenue and earnings beat analyst expectations in the second quarter of 2024 as demand for advanced chips used in AI applications continues to surge. In the quarter that ended June 30, 2024, the company’s net revenue rose 40.1% year-over-year to $20.82 billion. That surpassed analysts’ revenue estimate of $20.09 billion.

CEO C.C. Wei, in an earnings call, said business during the quarter was supported by robust demand for its industry-leading 3nm and 5nm technologies. TSMC’s shipments of 3-nanometer accounted for 15% of total wafer revenue, 5-nanometer constituted 35%, and 7-nanometer made up 17%. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 67% of total wafer revenue.

TSMC’s non-GAAP income from operations rose 41.9% year-over-year to $8.86 billion. Its net income and earnings per ADR were $7.66 billion and $1.48, increases of 36.3% year-over-year, respectively. Its earnings per ADR compared to the consensus estimate of $1.42.

“Moving into third quarter 2024, we expect our business to be supported by strong smartphone and AI-related demand for our leading-edge process technologies,” said Wendell Huang, Chief Financial Officer of TSMC.

Based on the company’s current business outlook, TSMC’s management expects revenue between $22.40 billion and $23.20 billion for the third quarter of 2024. The company’s gross profit margin is projected to be between 53.5% and 55.5%, and its operating profit margin is anticipated to be between 42.5% and 44.5%.

Why TSMC's Stock Dip May Be a Buying Opportunity

TSMC's leadership in advanced chip manufacturing, coupled with the growing demand for advanced chips across AI, 5G, and high-performance computing sectors, positions the company for long-term growth. Management has projected third-quarter revenue to be $22.40-$23.20 billion, compared to $17.30 billion reported in the previous year’s quarter.

Meanwhile, analysts appear highly bullish about the company’s earnings growth. Street expects TSMC’s revenue and EPS for the current quarter (ending September 2024) to grow 38.8% and 37.9% year-over-year to $23.44 billion and $1.78, respectively.

For long-term investors, TSMC's recent 10% decline may present an opportunity to buy into a company at the forefront of technological innovation. While short-term market fluctuations and geopolitical concerns may persist, the company's technological leadership and strong growth outlook make it a compelling choice for those looking to benefit from the continued evolution of AI and semiconductor technology.

Bottom Line

TSMC's recent stock dip presents a potential buying opportunity for long-term investors seeking exposure to a global leader in semiconductor innovation. With its industry-leading 3nm and 5nm process technologies, TSMC is well-positioned to capitalize on the growing demand for advanced chips, particularly in AI, 5G, and high-performance computing (HPC) industries.

While geopolitical risks and market volatility may pose challenges in the near term, TSMC’s strong earnings outlook and continuous innovation in semiconductor manufacturing suggest that this dip could be a strategic entry point.

NVDA’ Blackwell Delay: Is It Time to Rotate Into AMD?

NVIDIA Corporation (NVDA), the AI darling, recently hit a rough patch. A report from The Information revealed that Nvidia’s highly anticipated Blackwell series chips are delayed due to design flaws, causing a sharp 15% drop in the stock over the past week. Even with this dip, the stock is still up more than 170% over the past year, but as we know, past performance isn’t a guarantee of future returns.

So, what’s going on with Nvidia? And more importantly, is it time to consider alternatives?

Dark Clouds Are Looming Over the Future of Nvidia

Back in March, NVDA announced its Blackwell series, boasting capabilities that promised to build and operate real-time generative AI on trillion-parameter large language models at a fraction of the cost and energy consumption of its predecessor. But fast forward a few months, and the picture isn't as rosy.

According to the report, the company has informed major customers, including tech giants like Alphabet Inc. (GOOGL) and Microsoft Corporation (MSFT), that shipments of its Blackwell AI accelerator will be delayed by at least three months due to design flaws. It appears to involve Taiwan Semiconductor Manufacturing's new packaging technology, which NVDA is one of the first to use, and issues with the placement of bridge dies connecting two GPUs.

This isn’t just a minor hiccup. The delay could throw off the plans of customers such as Microsoft and Meta Platforms, Inc. (META), who have invested billions in Nvidia’s new GPUs to drive their AI services. The worry is that these delays might prevent these companies from deploying large clusters of the new chips in their data centers by the first quarter of 2025, as they had hoped.

Design flaws aren’t something that can be fixed overnight, which explains the significant delay. Nvidia, for its part, hasn’t outright confirmed or denied the delays but did say that “production is on track to ramp later in 2024.” However, with only a few months left in the year, this sounds more like an early 2025 release.

The delay has led tech companies to look for alternatives from NVDA’s competitors, such as Advanced Micro Devices, Inc. (AMD). MSFT and GOOGL, for example, are already working on next-generation products with AMD.

While Nvidia still dominates the data center GPU market, the Blackwell delay could weigh on its stock price and reputation. It’s arguably the most significant setback NVDA has faced since the AI boom began, and it might just be the moment for AMD to shine.

The Future of Advanced Micro Devices

With a market cap of $3.18 trillion, NVDA’s growth prospects seem more limited compared to AMD, which could see its valuation double from its current $250 billion as it gains momentum in the data center space.

In the second quarter, AMD’s data center revenue surged 115% year-over-year to $2.83 billion, accounting for nearly half of its total revenue. The Mi300 series brought in over $1 billion in quarterly revenue for the first time, with its customer base expanding as Microsoft became the first cloud provider to offer general availability for the Instinct Mi300X.

The significant increase in AMD’s data center sales, driven by AI applications, is expected to boost profits further, as this segment typically yields higher margins. Additionally, the company's recent acquisition of Silo AI, Europe's largest private AI lab, will enhance its capabilities in generative AI, including inference, training, and large language models.

Furthermore, Advanced Micro Devices’ client revenue rose 49% year-over-year to $1.49 billion, though with slimmer margins than its data center business. The recent drop in the gaming and embedded segments will likely bottom out soon, potentially lifting overall results. Even modest gains could significantly boost AMD's bottom line. The company reported net income of $265 million or $0.16 per share, up from $27 million or $0.20 per share recorded last year.

Investors are keen to see AMD challenge NVDA with its MI300X AI chip and demonstrate growth in its data center AI business. On the other hand, Street expects its revenue and EPS for the current year (ending December 2024) to increase 12.9% and 27.6% year-over-year to $25.62 billion and $3.38, respectively. If AMD can exceed expectations, the stock could experience significant gains in the coming months. Earlier this year, the company projected $4 billion in AI chip sales for 2024, representing about 15% of its expected revenue.

Is It Time to Ditch NVDA and Buy AMD?

Delays in Blackwell chip could impact NVDA’s market share and growth. If the delay is short, the stock might have minimal impact on its fiscal 2025 results. However, if it extends beyond three months, it could weigh heavily on the stock, especially as some analysts were anticipating a quicker resolution.

Additionally, concerns about whether the design flaw could lead to chip failures or affect production yields add to the uncertainty. Nvidia's decision to pause production and address the issue is a smart move, but it highlights the risks of its aggressive development timeline, which has been shortened from two years to one. While this strategy could pay off, it also increases the risk of errors or delays.

On the other hand, AMD is well-positioned to benefit from NVDA's ongoing headwinds. With its MI300X AI chip gaining traction and strong data center growth, Advanced Micro Devices could capture some market share from Nvidia. Given this backdrop, it might be the right time to consider rotating out of NVDA and into AMD, especially for investors looking to capitalize on the AI-driven growth in the semiconductor sector.