In a twist of market dynamics, Taiwan Semiconductor Manufacturing (NYSE: TSM) saw its stock take a surprising dip of around 2% during premarket trading on Thursday. This unexpected turn came despite the company’s first-quarter results handily outperforming expectations and its second-quarter revenue outlook exceeding even the most optimistic forecasts.
TSM’s Q1 Earnings Highlights
- TSMC’s Sales Forecast: TSMC, the world’s largest chipmaker, forecasts a potential 30% increase in second-quarter sales, driven by strong demand for semiconductors used in artificial intelligence (AI) applications.
- Demand for AI Processors: TSMC CEO C.C. Wei highlighted the robust demand for energy-efficient computing power for AI applications. The company sees strong demand for AI-related data center chips.
- Revenue Growth: TSMC expects AI servers to contribute a growing portion of its revenue, with projections indicating they could reach over 20% by 2028. However, demand for auto chips is expected to decline this year.
- Technological Leadership: TSMC anticipates strong demand for its advanced 3 nanometer (nm) and 5nm technologies, despite sluggish demand for smartphones.
- Financial Performance: TSMC reported a 9% increase in first-quarter net profit, exceeding market expectations, driven by demand for advanced chips. First-quarter revenue rose 13% year-on-year.
- Capital Expenditure and Investments: TSMC plans to maintain capital spending at $28 billion to $32 billion, with a focus on advanced technologies. The company is strategically expanding its global manufacturing footprint, including investments in the United States, Japan, and Germany.
- Arizona Plant Expansion: TSMC is on track to begin production at its Arizona plant in the first half of 2025. The company recently announced plans to expand its investment in the Arizona plant by $25 billion to $65 billion, with support from the U.S. government.
- Stock Performance: TSMC’s shares have surged 36% year-to-date and 57% in the past twelve months.
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content)
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