Taiwan Semiconductor’s Q1 Results Expected to Impress Amid Global Challenges
As the provider of 50% of the world’s semiconductor chip components, Wall Street is eagerly awaiting Taiwan Semiconductor’s TSM Q1 results, scheduled for Thursday, April 17.
In the face of global trade tensions, Taiwan Semiconductor has responded proactively by planning a $100 billion investment in semiconductor manufacturing plants in the U.S. This strategy aims to mitigate the impact of a 10% baseline import tax and aligns with the interests of the Trump administration.
This investment is essential as it reduces TSM’s vulnerability to potential production disruptions, particularly amid rising fears of a Chinese invasion of Taiwan. Additionally, TSM supplies major American companies like Nvidia NVDA, Apple AAPL, and AMD AMD.
Q1 Sales Projections for Taiwan Semiconductor
Analysts anticipate that Taiwan Semiconductor’s Q1 sales will rise by 33%, reaching $25.2 billion compared to $18.87 billion a year earlier. Furthermore, Q1 earnings per share (EPS) are expected to increase by 46%, hitting $2.02, up from $1.38 per share in the same quarter last year. Taiwan Semiconductor has impressively surpassed the Zacks EPS Consensus for 17 consecutive quarters, with an average earnings surprise of 7.55% over its past four quarterly reports.
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Future Outlook for Taiwan Semiconductor
According to Zacks estimates, Taiwan Semiconductor’s total sales are projected to grow by 26% this year, reaching $113.51 billion, up from $90.08 billion in 2024. Sales for FY26 are expected to increase another 19%, totaling $135.44 billion.
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Taiwan Semiconductor is also slated to see a 29% EPS growth in FY25, with annual earnings projected to soar another 21% in FY26, reaching $11.02 per share. However, it is worth noting that EPS estimates for FY25 and FY26 have slightly decreased over the last 60 days.
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Stock Performance and Valuation of TSM
Year-to-date (YTD), Taiwan Semiconductor’s stock has declined by 20%, underperforming the S&P 500’s 8% decrease and the Nasdaq’s 13% drop. Nevertheless, TSM has still achieved nearly a 60% gain over the past three years, outperforming broader indexes.
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Currently trading around $157, TSM shares are valued at a forward earnings multiple of 17.1X, which is lower than the benchmark’s 20.1X. Notably, TSM trades 50% below its decade-high forward earnings multiple of 34.4X and represents a slight discount to the 18.2X median during this period.
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Final Thoughts
While the recent drop in Taiwan Semiconductor’s stock may seem attractive for buyers, TSM currently holds a Zacks Rank #3 (Hold). Thus, the potential for further upside largely hinges on the company’s ability to meet or exceed Q1 expectations and provide reassuring guidance to confirm its optimistic growth trajectory.
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This article originally published on Zacks Investment Research (zacks.com).
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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.
