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Evaluating Taiwan Semiconductor (TSM) Stock: Buy, Sell, or Hold Ahead of Q4 Earnings?

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Wall Street Gears Up for Taiwan Semiconductor’s Earnings Release

As major banks kick off the Q4 earnings season, all eyes on Wall Street will be fixed on Taiwan Semiconductor’s TSM quarterly results, set to be revealed on Thursday, January 16.

As a leading player in the semiconductor industry, how will TSM’s earnings impact your investment decisions? Let’s explore whether now is the time to buy, sell, or hold.

Q4 Earnings Projections

Taiwan Semiconductor, the largest global supplier of integrated circuit foundries, is expected to see Q4 sales soar 34%, reaching $26.38 billion, up from $19.62 billion in the same quarter last year.

On the profit side, analysts predict Q4 earnings per share (EPS) will jump 50% to $2.16, compared to $1.44 per share in the previous year. Notably, Taiwan Semiconductor has a history of outperforming expectations, with an average EPS surprise of 7.9% over its last four reports.

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Future Outlook & EPS Changes

For fiscal 2024, total sales are anticipated to rise by 29%, with further growth projected at 25% in FY25, hitting $111.33 billion.

Annual earnings per share are forecasted to increase by 33% to $6.92, compared with $5.18 in FY23. Furthermore, EPS for FY25 is expected to climb another 27% to $8.81. However, it’s important to note that estimates for FY24 and FY25 have declined in recent months.

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TSM’s Stock Performance & Valuation

In the last year, TSM shares have surged over +100%, outperforming most major indexes and competing strongly against Qualcomm QCOM, while also nearing Nvidia’s NVDA impressive climb of +141%.

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Currently trading over $200 a share, TSM carries a forward earnings multiple of 22.6X. This is close to the S&P 500 benchmark and considerably lower than Nvidia’s 44.8X, yet higher than Qualcomm’s 14.3X.

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Conclusion

Overall, Taiwan Semiconductor remains a solid long-term growth option in the tech sector. However, investors might want to consider taking profits in TSM, given the recent declines in earnings estimate revisions. As of now, TSM holds a Zacks Rank #4 (Sell), indicating that strong Q4 results are crucial to confirming Taiwan Semiconductor’s promising outlook after such a significant stock rally.

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Taiwan Semiconductor Manufacturing Company Ltd. (TSM): Free Stock Analysis Report

QUALCOMM Incorporated (QCOM): Free Stock Analysis Report

NVIDIA Corporation (NVDA): Free Stock Analysis Report

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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.

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