TSMC (TSM) is expected to announce its Q3 results on October 17, and Wall Street expectations are high. Analysts expect the producer of artificial intelligence (AI) chips to benefit significantly from the boom in AI demand and post a 40% surge in Q3 profits.
Analysts’ Estimates for TSM’s Profits
According to a Reuters report, citing SmartEstimate compiled by LSEG, TSM’s net profit is estimated to be T$298.2 billion ($9.27 billion) at the end of the third quarter. If TSM reports in line with the estimates, the company’s quarterly profit will significantly exceed the T$211 billion reported in the same period last year.
In fact, in September, TSM’s revenue reached T$251.87 billion, growing 39% year-over-year.
Why Are Analysts Upbeat About TSM’s Q3 Results?
One of the major reasons that analysts are upbeat about the chipmaker’s Q3 results is due to the company being a major supplier to tech giants investing heavily in AI. The Reuters report cited Li Fang-kuo, Chairman of President Capital Management, who explained, “Most of TSMC’s major clients, including Apple (AAPL), Nvidia (NVDA), AMD (AMD), Qualcomm (QCOM), and Mediatek, are launching new products that rely heavily on TSMC’s advanced process technologies.”
Additionally, TSMC is investing heavily to expand its manufacturing footprint internationally. The company is building three new factories in Arizona, a project estimated to cost $65 billion, and it is also planning to expand its presence in Europe.
In fact, during its Q2 earnings, TSM raised its capex forecast for FY24 to be between $30 billion and $32 billion, compared to its earlier forecast in the range of $28 billion to $32 billion.
Is TSM a Buy, Sell, or Hold?
Analysts remain bullish about TSM stock, with a Strong Buy consensus rating based on five unanimous Buys. Over the past year, TSM has skyrocketed by more than 100%, and the average TSM price target of $205 implies an upside potential of 7.4% from current levels.
