Taiwan Semiconductor Manufacturing Co. Ltd. TSM is gaining attention as a leader in the global artificial intelligence (AI) market. As the top manufacturer of AI chipsets, TSM supplies major developers worldwide.
The company offers various wafer fabrication processes, including those for complementary metal-oxide-semiconductor logic, mixed-signal, radio frequency, embedded memory, and bipolar CMOS mixed-signal technologies, among others.
Taiwan Semiconductor Drives AI Chipset Innovation
Strong Revenue Projections for Q3 2024
On October 9, Taiwan Semiconductor announced September revenues of approximately $7.82 billion. When combined with results from the previous two months, TSM anticipates total revenues of $23.6 billion for the third quarter of 2024.
If achieved, this figure would surpass both the current Zacks Consensus Estimate and the company’s own forecast shared during its second-quarter earnings call. The increased demand for AI technology and smartphones has significantly bolstered TSM’s advanced process technologies.
TSM boasts a wide range of clients, most notably as the largest manufacturer of NVIDIA Corp.’s NVDA chipsets. NVIDIA is the leading global developer of generative AI chips. TSM also serves major companies such as Advanced Micro Devices Inc. AMD, Apple Inc. AAPL, Broadcom Inc. AVGO, and Intel Corp. INTC.
Earnings results for the third quarter of 2024 will be announced on October 17, prior to market opening. Currently, TSM holds a Zacks Rank of #1 (Strong Buy). You can view the full list of today’s Zacks #1 Rank stocks here.
Positive Earnings Revisions Indicate Growth
For the third quarter of 2024, the Zacks Consensus Estimate points to revenues of $22.72 billion, which suggests an increase of 31.5% year over year. The expected earnings per share (EPS) stands at $1.74, reflecting a year-over-year rise of 34.9%. TSM has consistently exceeded earnings expectations in the past four quarters, averaging a 7.8% beat.
In addition, TSM has seen favorable revisions in earnings estimates for both 2024 and 2025 over the past 60 days. The current Zacks Consensus indicates projected revenue and EPS growth rates of 23.6% and 24.5%, respectively, for 2024.
Looking ahead, the estimates for 2025 also show robust growth, with expected increases of 23.5% for revenues and 28.4% for EPS. Furthermore, TSM’s long-term EPS growth rate is estimated at 26.5%, significantly outperforming the broader S&P 500 growth rate of 13.6%.
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TSM Stock Rises Sharply This Year
Taiwan Semiconductor is enjoying robust demand for its advanced semiconductor technologies, particularly the 3-nanometer (nm) and 5nm processes. The company’s multi-project wafer processing service has also gained traction, helping customers lower mask costs and driving demand.
Investments in ramping up the production of 3nm technology and ongoing efforts to develop 2nm processes are likely to contribute to future growth. Additionally, advancements in the 7nm, 16nm, and 28nm technologies are positively impacting TSM’s financial performance. As a result, TSM’s stock price has surged an impressive 84.8% year to date.
Below is a chart detailing TSM’s price performance this year.
Image Source: Zacks Investment Research
Future Growth Potential for TSM
Currently, Taiwan Semiconductor’s stock is trading close to its 52-week high. Yet, analysts project an average short-term price target reflecting a potential increase of 7.3% from its last closing price of $192.21. The forecasted target price ranges from $170 to $250, indicating a maximum upside of 30.1% and a maximum downside of 11.6%.
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