Bloomberg Tech – TSMC Beats Expectations, Raises Revenue Outlook

Date: October 16, 2025
Hosts: Caroline Hyde (New York), Ed Ludlow (San Francisco)

Episode Overview

This episode of Bloomberg Tech centers on TSMC's strong Q3 earnings, a bullish revenue outlook for 2025, and the broader implications for the semiconductor industry amid ongoing U.S.–China trade tensions. Discussion branches into rare earth element supply risks, the steady momentum of the AI industry and its impact on markets, as well as major movements in tech leadership (notably Apple and Meta). The episode also covers data center investments, fintech developments, and the latest in AI policy debates.

Key Themes & Discussion Points

1. TSMC Earnings & Industry Impact

• TSMC’s Standout Performance:
  • TSMC reported earnings that beat analyst expectations and raised its 2025 sales growth outlook for the second time this year, buoyed by surging demand for cutting-edge chips used in AI applications.
  • Peter Ahlstrom (Bloomberg): "What they're seeing is that the demand for those chips is getting stronger. At this point they are watching the capital spending from some of the big customers out there, including OpenAI. They realize that Nvidia is going to have to supply those customers and the trends are going up from here." ([03:23])
• Capacity Expansion Pressures:
  • TSMC is supply-constrained and accelerating U.S. and Taiwanese manufacturing expansions to keep pace with high demand from Nvidia, AMD, Apple, and others.
  • Peter Ahlstrom: "They’re trying to add capacity in the US while they also build up their capacity in Taiwan right now. So it's taken a while for them to bring those fabs online and then meet this very strong demand." ([04:35])
• Market Reaction:
  • ADRs for TSMC saw volatility—initial gains faded amid broader market factors and high investor expectations.
  • Caroline Hyde: "Is it perhaps just a lot already priced in?" ([05:13])
  • Peter Ahlstrom: "There are a lot of factors going on... there are some high expectations going into this." ([05:22])

2. U.S.–China Trade Tensions and Rare Earth Leverage

• Escalating Tensions:
  • Trade talks have become tense, with China threatening export controls on rare earth elements—a move that could impact global supply chains.
  • Treasury Secretary Scott Bessant expressed skepticism and frustration at China’s tactics.
  • Brody Ford (quoting a Chinese official): "China will cause global chaos if the port shipping fees go through." ([06:24])
• Global Stakes:
  • China’s dominance in mining and refining rare earths (critical for tech, automotive, military) creates vulnerability for the U.S. and allies.
  • Mike Shepherd (Bloomberg): "They own, they really hold more than half of the world's reserves and... production of these elements, which are critical across the economy in consumer electronics and automobiles and in military equipment." ([09:06])
  • The U.S. and EU consider coordinated responses, but skepticism remains on China following through on threats due to probable global backlash.
  • Mike Shepherd: "Jameson Greer, the US Trade Representative, said yesterday he doesn't think China will actually take this step owing to the geopolitical implications..." ([08:20])

3. AI Market Sentiment and Earnings Outlook

• AI’s Resilience:
  • The AI “megatrend” remains “alive and well,” with no signs yet of a spending slowdown.
  • Angelo Cook (Edward Jones): "TSMC results and guidance provide some confidence in the durability of the AI theme. There's no AI related slowdown, at least not yet and is going to remain a key driver for markets." ([10:57])
• Investor Sentiment:
  • Hedge fund leaders like Ken Griffin note that "gen AI is not helping hedge funds beat the market with astonishing returns" ([11:17]), signaling AI’s impact is still maturing.
  • Cook urges caution but sees ample productivity gains ahead: "We are still in our view in the early stages of adoption... They're all rewiring their operating system to incorporate AI." ([11:47])
• Valuations & Market Cycles:
  • Cook recommends a balanced approach in portfolios—participate in AI’s secular growth, but diversify into neglected value names to mitigate potential overvaluation risk. ([13:32])

4. Corporate and Market Dynamics

• Tariffs, Labor, and Profits:
  • Tariffs haven’t hit consumers heavily; companies absorbed costs, keeping inflation manageable. The labor market is "low hiring, low firing," with productivity gains sustaining high profit margins.
  • Angelo Cook: "So we do not expect a major uptick in unemployment... only a small part of that slowdown in the labor market is because of AI or, you know, tariffs for that matter." ([15:29])
• Salesforce and Oracle:
  • Salesforce shares spike on double-digit growth guidance but questions remain on whether legacy software firms can profit from AI. ([17:15])
  • Oracle’s deep relationship with OpenAI helps the latter navigate chip export controls, highlighting the strategic role infrastructure partners play. ([18:03])

5. Tech Leadership Shakeups and Talent Wars

• Apple AI Departures:
  • Apple’s head of chat-GPT-like search is leaving for Meta, adding to a series of AI team exits. Speculation grows about Apple’s ability to keep pace in AI innovation.
  • Mark Gurman (Bloomberg): "This is probably the most significant or second most significant of that group... The core team developing the models underlying Apple Intelligence... they've been bleeding talent since July." ([19:15])
  • Apple is bringing in top execs Greg Federighi and Mike Rockwell to manage the shifting AI strategy.
  • Mark Gurman: "They have definitely have folks, but it's just about refueling the ranks and putting the right people in place." ([21:38])

6. Data Center Arms Race and Power Demands

• Meta’s Gigawatt-Scale Texas Data Center:
  • Meta’s $1.5B+ commitment exemplifies the “data center gold rush” as hyperscalers scramble for enough power and infrastructure.
  • Commentators highlight Texas’ unique position and grid issues as new investments strain local capacity.
  • Nancy Tangler (Laffer Tangler Investments): "OpenAI has said they need 20 gigawatts of power at 16 billion per 2 gigawatts... And Texas already has a grid problem." ([29:43])
• Photonics and Quantum Bets:
  • Firms like Coherent and Quantus Services are seen as enablers for quantum computing and modernizing power delivery for AI needs.
  • Risk mitigation calls for balancing established leaders, enablers, and speculative bets.
  • Nancy Tangler: "We're trying to mitigate risk by existing build positions in existing technology... and then couple that with names that are speculative." ([32:23])

7. Fintech Evolution: Upgrade’s Growth and Funding

• Upgrade’s Pre-IPO Raise:
  • Fintech startup Upgrade closes a $100M Series G round at a $7.3B valuation, planning ahead for public markets.
  • Unique multiproduct and multichannel strategy drives profitability and resilience compared to earlier neobanks.
  • Renault Laplanche (Upgrade CEO): "Indirect products are really turning into good source of customer acquisitions... These become Upgrade customers... benefit from all Upgrade products." ([39:05])
  • Regulatory environment for fintechs is still tight, as state regulation offsets federal relaxation. ([41:22])

8. Anthropic’s Funding and AI Policy Debates

• Anthropic Eyes Middle East Money:
  • In pursuit of ever-larger compute budgets, Anthropic seeks additional capital from Middle Eastern funds, despite prior remarks around democratic values.
  • Carmen Reinecke (Bloomberg): "Not everything that they do will always be helping democracies, that it may help dictators." ([44:45])
• AI Regulation & Industry Divides:
  • Anthropic’s cofounder Jack Clark calls for thoughtful AI regulation, supporting California’s Senate Bill 53 as a step to transparency.
  • Accusations from figures like David Sacks (via X) suggest Anthropic is leveraging regulatory fears for competitive gain—a “regulatory capture strategy.”
  • Brody Ford (Bloomberg): "Anthropic was the only company to say, yes, we think this is a good idea." ([47:37])

Notable Quotes & Memorable Moments

• On TSMC’s pivotal role in AI:
  • "They are the picks and shovels that are helping with this boom." – Peter Ahlstrom ([04:35])
• On China’s rare earth leverage:
  • "Think of night vision goggles. You can't run those without some rare earths." – Mike Shepherd ([09:06])
• On AI market sentiment:
  • "Of course from an investment standpoint, we need to be wary of complacency or euphoria... but the results speak for themselves, especially as we enter a key earnings season." – Angelo Cook ([12:55])
• On the evolving tech talent war:
  • "They've been breeding bleeding talent since July." – Mark Gurman ([20:29])
• On the data center boom:
  • "It's about the power, stupid." – Nancy Tangler ([29:43])

Key Segment Timestamps

• TSMC Earnings & Industry Impact: [01:52]–[05:53]
• U.S.-China Trade & Rare Earths: [05:53]–[10:29]
• AI Market & Earnings Outlook: [10:29]–[13:32]
• Corporate/Market Dynamics, Tariffs: [15:01]–[16:44]
• Salesforce, Oracle, OpenAI Partnerships: [17:15]–[18:47]
• Apple Leadership Changes: [18:47]–[22:29]
• Data Center Race & Energy Needs: [28:56]–[34:55]
• Fintech Funding/Upgrade Story: [37:07]–[43:01]
• Anthropic, Middle East, AI Policy: [43:26]–[48:46]

Summary

This episode paints a picture of an industry at inflection points: TSMC’s record-setting forecasts underpin bullish views on the durability of AI growth; however, supply constraints and international tensions—especially over China’s rare earth stranglehold—reveal vulnerabilities. Talent is on the move, as Apple struggles to retain key AI staffers while Meta and others rapidly scale up. Large-scale bets on data centers, energy infrastructure, and new fintech models signal both the promise and growing pains of a high-stakes technological transformation. And with AI regulation, the debate grows louder, with companies like Anthropic shaping—and challenging—the policy landscape.

The consensus: The AI megatrend is going strong, but beneath the exuberance lie challenges of supply, power, talent, and geopolitics that will define the industry’s next chapter.