Taiwan Semiconductor Manufacturing Company Ltd. (TSM) is set to announce its earnings for the fourth quarter of 2024 on January 16.
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The company’s focus on advanced semiconductor technologies and the growing global demand for artificial intelligence (AI) is expected to result in strong financial performance.
To find out more about TSM’s anticipated results for the fourth quarter, click here.
AI Drives TSM’s Growth
The swift adoption of AI technology in areas such as cloud computing, consumer electronics, and data centers is significantly increasing demand for high-performance chips. As the largest contract chipmaker in the world, Taiwan Semiconductor is at the forefront of this transformation. Their leading position in advanced process nodes, specifically 3-nanometer (nm) and 5-nm technologies, is expected to contribute notably to revenue growth this quarter.
Taiwan Semiconductor Manufacturing Company Ltd. Price and EPS Surprise
Taiwan Semiconductor Manufacturing Company Ltd. price and EPS surprise | Taiwan Semiconductor Manufacturing Company Ltd. Quote
In its third-quarter 2024 earnings call, Taiwan Semiconductor noted strong demand for its AI-focused products, including its Chip-on-Wafer-on-Substrate advanced packaging solutions. This particular segment has shown a consistent demand that surpasses supply, highlighting the company’s essential role in powering AI and high-performance computing applications.
For the fourth quarter, Taiwan Semiconductor expects revenues between $26.1 billion and $26.9 billion, indicating a sequential increase of 12.8% at the midpoint. This growth is largely due to TSM ramping up its 3-nm production, placing it in a strong position to capitalize on AI-driven opportunities.
Strong Customer Base Supports TSM’s Expansion
Taiwan Semiconductor’s ability to attract and keep top-level clients reinforces its industry leadership. Its clientele includes major companies such as NVIDIA Corporation (NVDA), Advanced Micro Devices, Inc. (AMD), Intel Corporation (INTC), Qualcomm, and Broadcom, with 10 significant customers contributing to 70% of its revenues in 2023.
This strong customer foundation is likely to have propelled revenue growth in the quarter, especially with NVIDIA demanding AI chips and Advanced Micro Devices producing next-generation products. Strengthening partnerships with these giants is anticipated to boost Taiwan Semiconductor’s revenue in the upcoming financial report.
Nonetheless, TSM may face challenges from rising operational costs linked to its international expansions and escalating electric prices in Taiwan, which could impact overall profitability for this Zacks Rank #3 (Hold) company during the fourth quarter. You can view the full list of Zacks #1 Rank (Strong Buy) stocks here.
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