MediaTek stock gains AI momentum after strong third quarter outlook

MediaTek reported stronger-than-expected third-quarter results and pointed to a sharper expansion in data center semiconductors. In an earnings-call report published by Investing.com on November 1 and updated November 3, the company said third-quarter revenue reached NT$168.06 billion, up 18.3 percent from a year earlier and 10.4 percent from the previous quarter.

AI accelerator drives next phase

Net income rose 10.8 percent year over year to NT$28.2 billion, while earnings per share reached NT$17.5. Operating margin increased to 16.1 percent, although gross margin slipped to 46.3 percent from the year-earlier quarter. Mobile-phone revenue declined 17 percent year over year and represented 37 percent of total revenue, underscoring the importance of newer growth areas.

Management expects fourth-quarter revenue between NT$210.1 billion and NT$221.8 billion, equivalent to sequential growth of 25 percent to 32 percent. The forecast includes a gross margin of 45 percent, plus or minus 1.5 percentage points, and an operating-expense ratio of 26 percent, plus or minus 2 percentage points.

The first-generation AI accelerator began initial shipments in September. MediaTek expects the program to generate US$2.5 billion in fourth-quarter revenue and to reach the high end of an approximately US$16 billion revenue target in 2027. Management said that would represent around 20 percent of the AI accelerator ASIC market. A second-generation accelerator remains on track for high-volume production in the first quarter of 2028.

Customer base broadens beyond mobile

MediaTek also confirmed a second customer for a separate custom ASIC project, with initial revenue expected in 2028. The customer was not identified, but management said it is not from China. The company is also expanding its system and rack offering through its NVLink Fusion partnership with NVIDIA.

For investors, the transition brings both growth potential and execution risks. AI infrastructure can lift revenue and operating leverage, but data center gross margins remain below the company average and advanced packaging and substrate capacity remain important constraints. MediaTek's investor-relations calendar lists its October monthly sales update for November 10.

Taiwan's TAIEX market provides the broader semiconductor backdrop for investors.

Further developments are collected in more news and analyses on MediaTek stock.