Taiwan Semiconductor Set to Shine in Q3 2024 with AI-Driven Growth
Taiwan Semiconductor Manufacturing Company Ltd. TSM is set to announce its third-quarter 2024 results on October 17.
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Taiwan Semiconductor is expected to demonstrate strong financial results again, largely due to rising investments in artificial intelligence (AI). The company’s advanced product lineup has likely helped meet the demand for high-performance computing and smartphone applications.
Find out how TSM’s third-quarter results are expected to unfold.
AI Expansion Boosts TSM’s Third-Quarter Results
The rapid growth of the global AI market has led to increased investments and demand for advanced technologies. As AI changes sectors such as cloud computing and consumer electronics, Taiwan Semiconductor’s position as the world’s largest contract chipmaker has become more influential. The company’s focus on AI technologies is expected to have significantly impacted its earnings this quarter.
During the second-quarter earnings call, Taiwan Semiconductor highlighted robust demand for its advanced 3-nanometer (nm) and 5-nm technologies, which are in high demand for AI and high-performance computing (HPC) applications. Reflecting this trend, the company’s revenue share from these advanced technologies has increased, showcasing its strong foothold in AI-related markets. In particular, TSM’s business in Chip-on-Wafer-on-Substrate (CoWoS) advanced packaging continues to experience rapid growth, with demand exceeding supply.
Price and EPS Surprise for TSM
Taiwan Semiconductor Manufacturing Company Ltd. price-eps-surprise | Taiwan Semiconductor Manufacturing Company Ltd. Quote
For the third quarter, TSM anticipates revenues between $22.4 billion and $23.2 billion, indicating a 9.5% increase from the previous quarter’s midpoint. This growth likely stems from strong demand for AI applications and HPC. With ongoing investments in expanding its 3-nm and 2-nm technology production, TSM is well-positioned to capture more AI-driven business.
The continuing AI revolution in the semiconductor industry offers considerable opportunities for TSM. AI accelerators and machine learning require efficient chips capable of handling large data sets, which TSM is equipped to provide. The company’s leadership in cutting-edge technologies like the 3-nm and 5-nm nodes enables it to meet the rising computational needs associated with AI. TSM’s continuous ramp-up in 3-nm production and research into 2-nm technology signifies its dedication to semiconductor innovation.
In summary, Taiwan Semiconductor’s substantial investments in AI technologies are likely to drive its earnings in the third quarter of 2024. As AI adoption grows in various industries, TSM’s cutting-edge semiconductor technology positions it to benefit greatly from this shift.
Strong Customer Base Fuels TSM’s Growth
Taiwan Semiconductor benefits from a solid customer base, which includes major players like NVIDIA NVDA, Advanced Micro Devices AMD, Intel INTC, Broadcom, Infineon Technologies, MediaTek, NXP Semiconductors, and Qualcomm.
In 2023, TSM’s ten largest customers contributed 70% of its total revenues, with the top customer alone accounting for 25%. The second-largest customer represented 11% of the total net revenue. Strengthening relationships with these industry giants has likely supported TSM’s revenue growth for the upcoming quarter.
Zacks Identifies Top Semiconductor Stock
While this stock is only a fraction of NVIDIA’s size, which has surged over 800% since our recommendation, it is positioned for substantial growth.
With strong earnings potential and an expanding customer base, it stands ready to meet the increasing demand for Artificial Intelligence, Machine Learning, and the Internet of Things. The global semiconductor manufacturing market is expected to grow from $452 billion in 2021 to $803 billion by 2028.
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