Last week we talked about the Google and Amazon earnings.
The companies building AI computing supply still can’t build fast enough to meet demand. That was signal buried under the noise of a Bitcoin decline and pontifications about software obsolescence.
Today, we got another clear signal.
Taiwan Semi reported an explosion in January sales — typically a post-holiday lull month. They reported 37% year-over-year growth. But that wasn’t the jaw-dropper — it was the 20% jump in revenue from the prior month (month-over-month growth)!
At the same time, the board gave a greenlight to a $45 billion capex plan — to build out capacity “based on market demand forecasts.”
Remember, Nvidia’s growth over the past two years has only been constrained by TSM’s ability to fulfill Nvidia’s demand for chips. TSM had hit a capacity wall. The demand was there, but the manufacturing capacity wasn’t.
That capacity has since been expanded, and will be further expanded with today’s capex plan announcement.
This 19% monthly growth for TSM looks like the “Nvidia moment“ for chips.
Remember, Nvidia shocked the world in May of 2023, with a huge quarter. And then Jensen Huang told us the data center demand was so steep, that the next quarter revenues would jump by more than 50% (from $7 billion to $11 billion).
And he said the hyper-growth would continue for the foreseeable future. So, May 2023 was “the moment” the world realized that AI was about to reinvent computing.
With that in mind, just a couple of weeks ago, we may have seen the “Nvidia moment” for storage — the moment the world realized AI demand for data storage is endless.
Sandisk reported $3 billion in revenue (up 31% from the prior quarter) and then guided for $4.4-$4.8 billion next quarter(!) — a 50% sequential leap in just 90 days.
And now we may have “the moment” for the world’s most advanced AI chips. And this is the proxy for the health of the entire hardware ecosystem. It’s on fire.