Record profits are not enough to guarantee a stock market rebound.
On 14 October, $SOXL$ plunged 13.35% as semiconductor stocks sold off amid hotter US inflation and concerns about the returns on massive AI investments.
Then came a crucial test: $TSM$ reported its Q3 results on 15 October, delivering record profits and beating expectations.
So, does this create a buying opportunity, or is the market warning investors to be more cautious?
📊 1. TSMC’s results are strong. But what comes next?
TSMC reported:
• Revenue: NT$1.494 trillion, up approximately 50.9% year-on-year.
• Net profit: NT$452.3 billion? No—TSMC reported approximately NT$452.3 billion in Q3 2025, while its Q3 2026 net profit was approximately NT$763.1 billion, up 68.7% year-on-year.
• Q4 revenue guidance: US$52.3–54.3 billion.
These results suggest demand for advanced chips remains strong. However, strong earnings do not automatically mean semiconductor stocks will rally. Investors also care about valuations, future growth expectations and the cost of financing AI infrastructure.
🔍 2. Nvidia or AMD: Which deserves closer attention?
🟢 $NVDA$ — Established AI leadership
Nvidia remains a major player in AI computing. The question is whether future earnings growth can justify its valuation, particularly if investors become less willing to pay premium prices for growth.
🔵 $AMD$ — The challenger
AMD offers exposure to the AI accelerator market. Investors need to assess whether customer adoption and future orders can translate into sustainable revenue and profits.
A lower share price alone does not make either company a bargain. Valuation and earnings expectations matter.
⚠️ 3. Should investors reduce semiconductor exposure?
That depends on their time horizon and risk tolerance.
The recent sell-off reflects concerns about inflation, interest rates and the profitability of AI spending. If those concerns persist, even companies reporting strong earnings could face further share-price pressure.
There is also an important distinction between owning individual chip companies and holding $SOXL$.
SOXL targets three times the semiconductor benchmark’s daily performance, before fees and expenses. It is designed for short-term trading, and daily compounding can produce very different results over longer periods. A recovery in chip stocks does not guarantee a quick recovery in SOXL.
💡 The Bottom Line
TSMC’s strong results suggest AI chip demand remains robust, but the market is becoming more selective. Strong earnings alone may not be enough if valuations are stretched and interest rates remain high.
The next move may depend on whether earnings growth can restore investor confidence—or whether market volatility has further to run.
If chip demand is still strong but share prices keep falling, is the market offering a buying opportunity or warning us that expectations have gone too far?
Sharing this perspective for discussion purposes only.
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