Shares of Taiwan Semiconductor Manufacturing Co. (TSM) or TSMC surged in pre-market trading after the chip major reported robust quarterly results and raised its revenue outlook. The company’s earnings in the third quarter increased by more than 54.2% year-over-year to NT$12.54 ($1.94 per American Depository Receipt), which surpassed analysts’ expectations of $1.77 per share.
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Meanwhile, TSM’s revenues increased by 39% year-over-year to NT$759.69 billion ($23.5 billion), above consensus estimates of $23 billion.
Wendell Huang, TSMC’s CFO, stated that strong demand for 3nm and 5nm technologies, driven by smartphones and AI, boosted Q3 performance. He expects continued robust demand for leading-edge process technologies in Q4 2024.
TSM Raises Its Revenue Outlook
Considering the robust Q3 results, the company anticipates a 30% revenue growth for FY24, up from its earlier projection of a mid-20% rise. Additionally, TSMC plans to raise its capital expenditures in 2025, expecting it to exceed this year’s investment of around $30 billion.
Furthermore, TSMC’s CEO, C.C. Wei, believes that revenue from AI server processors will more than triple this year, with AI-related sales likely to comprise a mid-teens percentage of total revenue in 2024.
For the fourth quarter, TSM expects revenue to be between $26.1 billion and $26.9 billion.
Is TSM a Buy, Sell, or Hold?
Analysts remain bullish about TSM stock, with a Strong Buy consensus rating based on a unanimous five Buys. Over the past year, TSM has surged by more than 100%, and the average TSM price target of $205 implies an upside potential of 9.3% from current levels. These analyst ratings are likely to change following TSM’s results today.
