Taiwan Semiconductor Manufacturing Co. Ltd. TSM has become a new poster boy on the global artificial intelligence (AI) frenzy. The company is the largest manufacturer of AI-based chipsets for the world’s best AI chipset developers.
TSM provides a range of wafer fabrication processes, including processes to manufacture complementary metal- oxide-semiconductor logic, mixed-signal, radio frequency, embedded memory, bipolar CMOS mixed-signal, and others.
Solid Q3 Outlook of TSM Stock
On Oct 9, Taiwan Semiconductor reported that its September revenues came in at around $7.82 billion. Added to its results for August and July, TSM is expected to report $23.6 billion in revenues for third-quarter 2024.
If this figure materializes, it will exceed the current Zacks Consensus Estimate as well as the company’s guidance given at the second-quarter 2024 earnings conference call. TSM said that solid adoption of AI and smartphones boosted the demand for its leading-edge process technologies.
TSM has a strong clientele. The company is the largest manufacturer of NVIDIA Corp.’s NVDA chipsets. NVIDIA is globally the largest developer of generative AI-based chips. TSM also caters to Advanced Micro Devices Inc. AMD, Apple Inc. AAPL, Broadcom Inc. AVGO and Intel Corp. INTC to name a few.
Taiwan Semiconductor will report third-quarter 2024 earnings results on Oct 17, before the opening bell. The stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Solid Earnings Estimate Revisions for TSM Shares
For third-quarter 2024, the Zacks Consensus Estimate currently shows revenues of $22.72 billion, suggesting an improvement of 31.5% year over year and earnings per share (EPS) of $1.74, indicating an appreciation of 34.9% year over year. The company reported positive earnings surprises in the last four reported quarters with the average beat being 7.8%.
Moreover, TSM has witnessed positive earnings estimate revisions for full-year 2024 and full-year 2025 in the last 60 days. At present, the Zacks Consensus Estimate indicates a year-over-year increase of 23.6% and 24.5%, respectively, for revenues and EPS in 2024.
Despite this solid growth, the current Zacks Consensus Estimate for full-year 2025 revenues and EPS for TSM reflects an upside of 23.5% and 28.4%, respectively. In addition, TSM has a long-term (3-5 years) EPS growth rate of 26.5%, significantly higher-than the broad-market index, S&P 500’s growth rate 13.6%.
Image Source: Zacks Investment Research
TSM’s Stock Price Soars Year to Date
Taiwan Semiconductor is experiencing solid demand for its advanced technologies, such as 3-nanometer (nm) and 5nm. The growing adoption of its multi-project wafer processing service, which allows customers to reduce mask costs, is driving its customer momentum.
TSM’s growing efforts to ramp up the production of 3nm and development of 2nm is a plus. Also, strength across its 7nm, 16nm and 28nm technologies is contributing well to its top-line growth. Consequently, the stock price of TSM has soared 84.8% year to date.
The chart below shows the price performance of TSM year to date.
Image Source: Zacks Investment Research
More Upside Left for TSM Shares
Taiwan Semiconductor is currently trading near its 52-week high level. Despite this, the average short-term price target of brokerage firms represents an increase of 7.3% from the last closing price of $192.21. The brokerage target price is currently in the range of $170-$250. This indicates a maximum upside of 30.1% and a maximum downside of 11.6%.
Image Source: Zacks Investment Research
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
