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Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
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AI Investments Boom to Aid Taiwan Semiconductor's Q4 Earnings Growth
Taiwan Semiconductor Manufacturing Company Ltd. (TSM - Free Report) is poised to release its fourth-quarter 2024 earnings on Jan. 16.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The company’s strategic focus on cutting-edge semiconductor technologies, combined with the surging global demand for artificial intelligence (AI) applications, positions it for robust financial results.
Click here to know how TSM’s overall fourth-quarter results are likely to be.
AI: The Catalyst for TSM’s Momentum
The rapid adoption of AI across industries like cloud computing, consumer electronics and data centers has fueled demand for high-performance chips. As the world’s largest contract chipmaker, Taiwan Semiconductor has been at the forefront of this revolution. Its leadership in advanced process nodes like 3-nanometer (nm) and 5-nm technologies is expected to have driven significant revenue growth in the fourth quarter.
Taiwan Semiconductor Manufacturing Company Ltd. Price and EPS Surprise
Taiwan Semiconductor Manufacturing Company Ltd. price-eps-surprise | Taiwan Semiconductor Manufacturing Company Ltd. Quote
During its third-quarter 2024 earnings call, Taiwan Semiconductor highlighted strong demand for its AI-focused products, including Chip-on-Wafer-on-Substrate advanced packaging solutions. This segment has seen consistent demand exceeding supply, reflecting the company’s critical role in powering AI and high-performance computing applications.
For the fourth quarter, Taiwan Semiconductor has projected revenues between $26.1 billion and $26.9 billion, representing a sequential increase of 12.8% at the midpoint. This growth is attributed to TSM’s ramp-up of 3-nm production, positioning it to capitalize on AI-driven opportunities.
Robust Customer Base Fuels TSM’s Growth
Taiwan Semiconductor’s ability to attract and retain top-tier customers underscores its dominance. Its client roster includes industry leaders like NVIDIA Corporation (NVDA - Free Report) , Advanced Micro Devices, Inc. (AMD - Free Report) , Intel Corporation (INTC - Free Report) , Qualcomm and Broadcom, with 10 major customers contributing 70% of its 2023 revenues.
This strong customer alignment is likely to have driven revenue growth for the quarter, particularly given NVIDIA’s demand for AI chips and Advanced Micro Devices’ next-gen products. Growing relationships with these behemoths are expected to have Taiwan Semiconductor’s top-line growth in the to-be-reported quarter.
Nonetheless, rising operational costs, especially from its overseas expansions along with higher electric prices in Taiwan are anticipated to have negatively impacted this Zacks Rank #3 (Hold) company’s profitability in the fourth quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.