Shares of Taiwan Semiconductor Manufacturing Company (NYSE: TSM) have been transferring greater Thursday after the world’s largest contract chip producer posted better-than-expected ends in its fourth-quarter earnings report.
As of 12:20 p.m. ET, the inventory was up by 5.2%.
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TSMC cannot be stopped
TSMC has been an enormous winner amid the AI growth and a broader restoration within the chip sector, and that momentum continued within the fourth quarter.
Income within the interval jumped 38.8% to $26.9 billion, topping analysts’ consensus estimate of $26.3 billion. The corporate continued to learn from the rising adoption of superior chips as income from its 3-nanometer (nm) course of expertise rose to 26% from 15% within the year-ago quarter. Superior applied sciences, which it defines as 7nm or much less, accounted for 74% of income.
Margins additionally expanded, reflecting each the expansion in gross sales of superior chips and TSMC’s personal pricing energy. Gross margin improved from 53% to 59%, and working margin jumped from 41.6% to 49%. Consequently, the corporate reported adjusted earnings per share of $2.24, up 57% 12 months over 12 months.
“Our enterprise within the fourth quarter was supported by robust demand for our industry-leading 3nm and 5nm applied sciences,” CFO Wendell Huang mentioned. Nonetheless, he cautioned, “Transferring into first-quarter 2025, we count on our enterprise to be impacted by smartphone seasonality, partially offset by continued development in AI-related demand.”
What’s subsequent for TSMC
Regardless of the remark above, TSMC nonetheless issued a lot better steerage than anticipated for the primary quarter. It forecasts income of $25 billion to $25.8 billion, which might be a sequential decline, however was properly forward of analysts’ consensus estimate of $23.9 billion. It additionally expects working margin to stay robust, within the 46.5% to 48.5% vary.
Given the momentum within the AI area, TSMC’s dominant place in high-end chip manufacturing, and the corporate’s cheap valuation, the inventory seems to be like a very good guess to maneuver greater.
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Jeremy Bowman has positions in Taiwan Semiconductor Manufacturing. The Motley Idiot has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.
