Taiwan Semiconductor Manufacturing Beats Q4 Results

Shares of Taiwan Semiconductor Manufacturing (NYSE:TSM) rose more than 3% on Wednesday following the company's announcement of increased second-quarter sales, driven by the ongoing AI boom and global investment in data centers.

TSMC, the sole supplier of Nvidia's and Apple's most advanced chips, reported June revenue of NT$207.9 billion. This contributed to a 40% growth in the June quarter, surpassing the average projection of a 35.5% increase.

The surge in orders for AI chips has helped mitigate weak smartphone sales, which are starting to recover. TSMC and other AI-related stocks have significantly boosted Taiwan's Taiex Index by more than 40% over the past year, despite ongoing US-China geopolitical tensions.

On Wednesday, June 5, 2024, Barclays upgraded its rating on TSM (NYSE:TSM), also known as Taiwan Semiconductor Manufacturing Company, to Overweight, indicating a positive outlook on the stock's future performance. This decision reflects Barclays' confidence in TSM's growth potential, despite maintaining a recommendation to hold. The upgrade was accompanied by a significant increase in the price target to $170 from $150, suggesting that Barclays sees a strong upside for TSM's stock, which was trading at $152.47 at the time of the announcement.

Taiwan Semiconductor Manufacturing Company is a key player in the global semiconductor industry, providing essential manufacturing services to a wide range of clients, including major technology firms. The company's role is particularly crucial given the current geopolitical tensions and the impact of U.S. sanctions on Chinese AI chip companies. These sanctions have led several Chinese firms to adjust their strategies by designing less powerful processors to maintain access to TSMC's production capabilities. This situation underscores TSMC's strategic importance in the semiconductor supply chain and its ability to navigate complex international relations.

The recent developments highlight TSMC's resilience and adaptability in a challenging global market. The company's stock has experienced fluctuations, with a recent decrease of 1.60% bringing the price to $152.47. Despite this, TSM's stock has shown significant growth over the past year, with prices ranging from a low of $84.02 to a high of $160.78. This performance reflects the company's strong market position and the high demand for its manufacturing services.

TSM's market capitalization stands at approximately $680.87 billion, indicating its substantial size and influence in the industry. With a trading volume of about 9.94 million shares on the NYSE, TSM remains a highly watched and traded stock. The company's ability to maintain production for its clients, even in the face of geopolitical challenges, is a testament to its operational excellence and strategic foresight.

The upgrade by Barclays, along with the increased price target, suggests that analysts are optimistic about TSM's ability to continue its growth trajectory. The company's strategic importance, coupled with its strong financial performance and market position, makes it a key player in the semiconductor industry. As TSM navigates the complexities of international trade and technology development, its stock remains a focal point for investors looking for opportunities in the tech sector.

Taiwan Semiconductor Manufacturing (NYSE:TSM), the world's leading contract chipmaker, reported a robust profit for the first quarter, surpassing expectations due to rising demand from the burgeoning artificial intelligence sector.

TSMC announced a net income of T$225.49 billion for the quarter ending March 31, exceeding Wall Street projections of T$218.1 billion ($6.7 billion) and marking an increase from last year's T$206.99 billion. Earnings per share for the quarter were T$8.70, or $1.38 per American Depository Receipt, up from $1.31 the previous year.

However, the quarterly comparison showed a 5.5% drop in net income, suggesting a slight cooling in demand compared to the peak levels of 2023. The company is also facing rising costs as it ramps up investments in chip development, with capital expenditures climbing to $5.77 billion in the first quarter from $5.24 billion in the previous quarter.

Revenue for the quarter grew 16.5% year-on-year to T$592.64 billion, aided partly by a weak Taiwan dollar which enhanced dollar-denominated earnings.

This financial performance is particularly noteworthy as TSMC's results are often viewed as a barometer for global chip demand due to its critical position in the semiconductor industry.

Taiwan Semiconductor Manufacturing (NYSE:TSM) reported a significant increase in its March sales, attributed largely to the growing demand for chips fueled by advancements in artificial intelligence. TSMC's sales for March soared by 34% from the previous year, reaching T$195.21 billion ($6.1 billion), and saw a 7.5% rise from February's figures.

This surge led to a first-quarter total of T$592.64 billion in sales, marking a 16.5% increase year-on-year. It's important to note that this substantial growth was partly due to the low sales base in 2023, when TSMC faced weaker chip demand. The latter half of 2023, however, began showing signs of recovery, driven by AI-related demand.

As the world's leading contract chipmaker, TSMC supplies major tech companies, including NVIDIA Corporation and Apple. NVIDIA, in particular, has significantly contributed to TSMC's demand, thanks to the processor manufacturer's focus on AI-driven chip development. The heightened interest in AI has recently propelled TSMC's valuation to new heights, with plans underway to expand its major chipmaking facility in Phoenix, Arizona.

Morgan Stanley's analysts maintained their Overweight rating on Taiwan Semiconductor Manufacturing (NYSE:TSM) ahead of its Q3/23 earnings announcement, scheduled on October 19.

While some investors express concerns regarding the broader economic landscape and potential extended semiconductor downturn, Morgan Stanley anticipates the company's Q4/23 revenue guidance might exceed expectations. This optimism stems from strong demand for AI semiconductors and urgent orders from Android smartphone and PC CPU brands like MediaTek and AMD. The analysts predict a 10% quarter-over-quarter growth in Q4/23 revenue and anticipate a gross margin surpassing 53%.

Morgan Stanley's analysts maintained their Overweight rating on Taiwan Semiconductor Manufacturing (NYSE:TSM) ahead of its Q3/23 earnings announcement, scheduled on October 19.

While some investors express concerns regarding the broader economic landscape and potential extended semiconductor downturn, Morgan Stanley anticipates the company's Q4/23 revenue guidance might exceed expectations. This optimism stems from strong demand for AI semiconductors and urgent orders from Android smartphone and PC CPU brands like MediaTek and AMD. The analysts predict a 10% quarter-over-quarter growth in Q4/23 revenue and anticipate a gross margin surpassing 53%.