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Should TSM Stock Be Part of Your Portfolio Ahead of Q3 Earnings?
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Taiwan Semiconductor Manufacturing Company Ltd. (TSM - Free Report) is scheduled to report third-quarter 2024 results on Oct. 17.
The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.74 per share, which implies growth of 34.9% from the year-ago quarter’s reported number. The estimate has been revised upward by a couple of cents over the past 60 days.
Image Source: Zacks Investment Research
Taiwan Semiconductor expects revenues to be between $22.4 billion and $23.2 billion, and the Zacks Consensus Estimate for the same is pegged at $22.72 billion, indicating a rise of 31.5% from the year-ago quarter’s reported actuals.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Taiwan Semiconductor has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 7.8%.
Taiwan Semiconductor Manufacturing Company Ltd. Price and EPS Surprise
Our proven model does not conclusively predict an earnings beat for Taiwan Semiconductor this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
TSM has an Earnings ESP of 0.00% and a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors Influencing TSM’s Quarterly Performance
Taiwan Semiconductor continues to assert its dominance in the semiconductor space, benefiting from a robust industry rebound fueled by the growing prominence of artificial intelligence (AI). The surge in AI-driven applications (in manufacturing and end products) has been a significant catalyst for chipset manufacturers like TSM. The rise of data-centric technologies, especially cloud computing, the Internet of Things (IoT) and the metaverse, has increased the demand for semiconductors, contributing positively to the company’s business performance in the to-be-reported quarter.
TSM’s consistent investments in next-generation and specialty technologies are likely to have driven growth in the third quarter. Its leadership in 7nm and 3nm chip technologies has been instrumental, offering advanced capabilities to customers in high-demand industries. The 5nm process technology has also contributed to TSM’s wafer revenues, reflecting the solid market adoption of these smaller, more efficient chipsets. Furthermore, Taiwan Semiconductor's strategic focus on ramping up 3nm production while advancing its 2nm development positions it for continued leadership in the semiconductor space.
TSM’s expansion into high-performance computing (HPC) and smartphone sectors is expected to have bolstered its performance in the to-be-reported quarter. The company’s innovative 3nm Fin Field-Effect Transistor (FinFET) technology, alongside its range of FinFET options (spanning 4nm, 5nm, 6nm and 7nm nodes) has become a key growth driver, particularly in HPC applications. Additionally, TSM’s advanced FinFET technologies, such as the enhanced 3nm and plus variants of the 4nm and 5nm chips, have helped it maintain strong momentum in the smartphone market.
Taiwan Semiconductor's technological advancements are anticipated to have supported its expansion into automotive, IoT and digital consumer electronics. The adoption of TSM’s multi-project wafer processing service, which helps customers cut costs, has likely boosted the company’s top-line growth. This diversification across industries enhances the company’s resilience and offers multiple revenue streams.
Taiwan Semiconductor’s strong partnerships with leading chipmakers like NVIDIA (NVDA - Free Report) , Advanced Micro Devices (AMD - Free Report) and Intel (INTC - Free Report) have also been major growth drivers. As one of NVIDIA’s largest chipset manufacturers, TSM benefits from its involvement in the booming AI, data center and gaming markets. This has increased the demand for advanced chipsets.
However, macroeconomic uncertainties, including inflationary pressures and ongoing geopolitical tensions — particularly between the United States and China — pose significant challenges. These headwinds are likely to have somewhat offset the benefits of the aforementioned factors in the third quarter.
TSM Stock Price Performance & Valuation
Taiwan Semiconductor’s shares have appreciated 84.8% on a year-to-date basis, outperforming the S&P 500 index’s rise of 22.8% and the Zacks Computer and Technology sector’s growth of 26.9%.
YTD Price Return Performance
Image Source: Zacks Investment Research
Now, let’s look at the value that TSM offers to its investors at the current levels. Currently, Taiwan Semiconductor is trading at a discount, with a forward 12-month P/E of 24.33X compared with the sector’s 26.09X.
Image Source: Zacks Investment Research
Investment Thesis for TSM Stock
Taiwan Semiconductor’s strength in chip manufacturing, strong position in the semiconductor industry, robust portfolio of technologies, and expanding network of semiconductor facilities, which currently includes one 150mm wafer fab, six 200mm wafer fabs, six 300mm wafer fabs, and five advanced backend fabs, bode well for its near and long-term prospects.
These factors position TSM to ride on the growing proliferation of AI, smartphones and electric vehicles. Robust demand for advanced technologies, solid momentum among customers, increasing design wins, and a strong presence in the domestic and international markets are expected to continue to drive the company’s top and bottom-line performances.
Final Thoughts: Buy TSM Stock Now
Given TSM’s leadership in semiconductor technology, strategic positioning in high-growth markets like AI and HPC, and strong customer base, it is positioned for continued growth. Despite short-term challenges, the long-term prospects look bright, making now an opportune time to add TSM stock to your portfolio. With a solid track record of earnings beats, Taiwan Semiconductor’s upcoming earnings report could further drive investor confidence.
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Should TSM Stock Be Part of Your Portfolio Ahead of Q3 Earnings?
Taiwan Semiconductor Manufacturing Company Ltd. (TSM - Free Report) is scheduled to report third-quarter 2024 results on Oct. 17.
The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.74 per share, which implies growth of 34.9% from the year-ago quarter’s reported number. The estimate has been revised upward by a couple of cents over the past 60 days.
Image Source: Zacks Investment Research
Taiwan Semiconductor expects revenues to be between $22.4 billion and $23.2 billion, and the Zacks Consensus Estimate for the same is pegged at $22.72 billion, indicating a rise of 31.5% from the year-ago quarter’s reported actuals.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Taiwan Semiconductor has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 7.8%.
Taiwan Semiconductor Manufacturing Company Ltd. Price and EPS Surprise
Taiwan Semiconductor Manufacturing Company Ltd. price-eps-surprise | Taiwan Semiconductor Manufacturing Company Ltd. Quote
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Taiwan Semiconductor this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
TSM has an Earnings ESP of 0.00% and a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors Influencing TSM’s Quarterly Performance
Taiwan Semiconductor continues to assert its dominance in the semiconductor space, benefiting from a robust industry rebound fueled by the growing prominence of artificial intelligence (AI). The surge in AI-driven applications (in manufacturing and end products) has been a significant catalyst for chipset manufacturers like TSM. The rise of data-centric technologies, especially cloud computing, the Internet of Things (IoT) and the metaverse, has increased the demand for semiconductors, contributing positively to the company’s business performance in the to-be-reported quarter.
TSM’s consistent investments in next-generation and specialty technologies are likely to have driven growth in the third quarter. Its leadership in 7nm and 3nm chip technologies has been instrumental, offering advanced capabilities to customers in high-demand industries. The 5nm process technology has also contributed to TSM’s wafer revenues, reflecting the solid market adoption of these smaller, more efficient chipsets. Furthermore, Taiwan Semiconductor's strategic focus on ramping up 3nm production while advancing its 2nm development positions it for continued leadership in the semiconductor space.
TSM’s expansion into high-performance computing (HPC) and smartphone sectors is expected to have bolstered its performance in the to-be-reported quarter. The company’s innovative 3nm Fin Field-Effect Transistor (FinFET) technology, alongside its range of FinFET options (spanning 4nm, 5nm, 6nm and 7nm nodes) has become a key growth driver, particularly in HPC applications. Additionally, TSM’s advanced FinFET technologies, such as the enhanced 3nm and plus variants of the 4nm and 5nm chips, have helped it maintain strong momentum in the smartphone market.
Taiwan Semiconductor's technological advancements are anticipated to have supported its expansion into automotive, IoT and digital consumer electronics. The adoption of TSM’s multi-project wafer processing service, which helps customers cut costs, has likely boosted the company’s top-line growth. This diversification across industries enhances the company’s resilience and offers multiple revenue streams.
Taiwan Semiconductor’s strong partnerships with leading chipmakers like NVIDIA (NVDA - Free Report) , Advanced Micro Devices (AMD - Free Report) and Intel (INTC - Free Report) have also been major growth drivers. As one of NVIDIA’s largest chipset manufacturers, TSM benefits from its involvement in the booming AI, data center and gaming markets. This has increased the demand for advanced chipsets.
However, macroeconomic uncertainties, including inflationary pressures and ongoing geopolitical tensions — particularly between the United States and China — pose significant challenges. These headwinds are likely to have somewhat offset the benefits of the aforementioned factors in the third quarter.
TSM Stock Price Performance & Valuation
Taiwan Semiconductor’s shares have appreciated 84.8% on a year-to-date basis, outperforming the S&P 500 index’s rise of 22.8% and the Zacks Computer and Technology sector’s growth of 26.9%.
YTD Price Return Performance
Image Source: Zacks Investment Research
Now, let’s look at the value that TSM offers to its investors at the current levels. Currently, Taiwan Semiconductor is trading at a discount, with a forward 12-month P/E of 24.33X compared with the sector’s 26.09X.
Image Source: Zacks Investment Research
Investment Thesis for TSM Stock
Taiwan Semiconductor’s strength in chip manufacturing, strong position in the semiconductor industry, robust portfolio of technologies, and expanding network of semiconductor facilities, which currently includes one 150mm wafer fab, six 200mm wafer fabs, six 300mm wafer fabs, and five advanced backend fabs, bode well for its near and long-term prospects.
These factors position TSM to ride on the growing proliferation of AI, smartphones and electric vehicles. Robust demand for advanced technologies, solid momentum among customers, increasing design wins, and a strong presence in the domestic and international markets are expected to continue to drive the company’s top and bottom-line performances.
Final Thoughts: Buy TSM Stock Now
Given TSM’s leadership in semiconductor technology, strategic positioning in high-growth markets like AI and HPC, and strong customer base, it is positioned for continued growth. Despite short-term challenges, the long-term prospects look bright, making now an opportune time to add TSM stock to your portfolio. With a solid track record of earnings beats, Taiwan Semiconductor’s upcoming earnings report could further drive investor confidence.