TSMC Reports Strong Q4 Performance and Plans for 3nm Chips in Japan
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4d ago
0mins
Should l Buy TSM?
Source: seekingalpha
Taiwan Semiconductor Manufacturing Co Ltd (TSMC) has seen its stock rise by 5.00%, reaching a 5-day high, as the company reported impressive fourth-quarter results.
TSMC recently announced a strong fourth-quarter performance with sales rising nearly 26% to $33.7 billion and earnings increasing 35% to $3.14 per share. Management has guided for further growth to over $35 billion in the first quarter, indicating robust market demand and profitability. Additionally, TSMC plans to build its second wafer fabrication plant in Kumamoto, Japan, to manufacture advanced 3nm chips, raising its total investment in the plant to ¥2.6 trillion ($17 billion), demonstrating strong confidence in the semiconductor market.
This strategic move not only solidifies TSMC's leadership position in the global semiconductor industry but also positions the company to benefit significantly from the growing demand for advanced chips, particularly in AI applications.
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Analyst Views on TSM
Wall Street analysts forecast TSM stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for TSM is 313.46 USD with a low forecast of 63.24 USD and a high forecast of 390.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
8 Analyst Rating
7 Buy
1 Hold
0 Sell
Strong Buy
Current: 330.730
Low
63.24
Averages
313.46
High
390.00
Current: 330.730
Low
63.24
Averages
313.46
High
390.00
About TSM
Taiwan Semiconductor Manufacturing Co Ltd is a Taiwan-based integrated circuit foundry service provider. The Company is primarily engaged in integrated circuit manufacturing services. It offers advanced process technologies, specialised process solutions, advanced photomask and silicon stacking, and packaging-related technologies, while supporting a comprehensive design ecosystem. The Company's products serve diverse electronic sectors including artificial intelligence, high-performance computing, wired and wireless communications, automotive and industrial equipment, personal computing, information applications, consumer electronics, smart internet of things, and wearable devices.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
TSMC Reports Continued Growth in Q4 Earnings
- Significant Revenue Growth: TSMC's Q4 revenue reached $33.73 billion, reflecting a 25.5% year-over-year increase, demonstrating strong demand in the semiconductor market and reinforcing its leadership position.
- Strong Profit Margins: The company reported a profit margin of 48.3%, indicating its competitive advantage in high-end chip manufacturing, effectively controlling costs while achieving high returns.
- Advanced Process Technology: In 2023, over half of TSMC's revenue came from chips larger than 7nm, with significant increases in the production of 3nm and 5nm chips, as 3nm chips accounted for 28% of total shipments, showcasing ongoing investment in technological innovation.
- Robust Market Demand: With the rapid advancement of artificial intelligence technologies, TSMC is experiencing increasing customer demand, solidifying its status as the world's largest chip foundry and is expected to benefit from the growth in AI infrastructure investments.
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TSMC: The Winner in the AI Era
- Market Growth Potential: According to Fortune Business Insights, the AI market is projected to grow from $375.9 billion this year to $2.48 trillion by 2034, representing a compound annual growth rate of 26.6%, which presents significant opportunities for related companies.
- TSMC's Industry Position: As the world's largest semiconductor foundry, TSMC produced over 11,800 products across 288 different processes in 2024, demonstrating its unparalleled influence and customer base in the industry.
- Strong Financial Performance: TSMC reported fourth-quarter revenue of $33.73 billion, a 25.5% increase year-over-year, with a profit margin of 48.3%, indicating robust profitability in a rapidly growing market.
- Technological Advancements and Market Demand: TSMC derived over half of its revenue from chips larger than 7 nanometers in 2023, but has significantly increased production of 3nm and 5nm chips, which now account for 28% and 35% of total shipments respectively, showcasing its agility in adapting to technological advancements and market demand shifts.
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- Hardware Companies Surge: Companies like Nvidia, Broadcom, and Taiwan Semiconductor are profiting from AI demand, with Nvidia's GPUs being the preferred choice for AI workloads; AI spending is projected to reach $3 trillion to $4 trillion by 2030, indicating significant market potential.
- Cloud Computing Market Expansion: Major cloud providers such as Amazon, Google, and Microsoft are heavily investing in data centers to meet the demand for computing power from AI developers, with Microsoft Azure achieving a growth rate of 39% in Q2 FY 2026, showcasing its competitive edge in the market.
- Recurring Revenue Stream: The rental model of cloud computing provides these companies with a continuous revenue stream; while they need to regularly replace computing units, the initial investment in infrastructure is already covered, leading to a substantial increase in future profitability.
- Intensifying Market Competition: As AI hardware and cloud computing rapidly evolve, competition among related companies will intensify, prompting investors to monitor these firms' performance in technological innovation and market share.
See More
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- Market Demand Growth: AI computing hardware demand is expected to surge through 2030, with cloud computing companies being key drivers, indicating that AI remains a leading investment theme attracting significant capital inflows.
- Hardware Investment Opportunities: Companies like Nvidia, Broadcom, and Taiwan Semiconductor are excelling in the AI hardware space, with Nvidia's GPUs widely used for AI workloads, known for their high performance despite higher costs, while Broadcom's ASIC designs offer more cost-effective solutions, with AI semiconductor revenue expected to double by Q1 2026.
- Cloud Computing Infrastructure: Amazon, Google, and Microsoft are the major cloud providers, with Microsoft Azure achieving a 39% growth rate in Q2 FY 2026; although AWS is growing slower, all three are actively investing in data centers to meet rising demand, ensuring a continuous revenue stream.
- Long-Term Investment Potential: With AI spending projected to reach $3 trillion to $4 trillion by 2030, the combination of cloud computing and AI hardware presents enormous long-term return potential for investors, especially as infrastructure builds out, significantly enhancing profitability.
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- Surging Memory Demand: Micron dominates in high-bandwidth memory (HBM), dynamic random access memory (DRAM), and NAND chips, with forecasts indicating the memory market could grow to $100 billion by 2028, highlighting the accelerating demand for memory chips.
- Capital Expenditure Driving Price Increases: With big tech expected to spend over $500 billion on AI infrastructure, shortages in HBM solutions are anticipated, with TrendForce research suggesting DRAM and NAND prices could soar by 60% and 38%, respectively, in Q1 alone.
- Attractive Valuation: Micron currently trades at a forward P/E ratio of 12, significantly lower than other leaders in the AI chip market, and combined with the multi-year supercycle for HBM chips, this indicates strong investment potential for Micron stock.
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- Buying Opportunities: Stocks like JPMorgan, Apple, and Boeing have entered buy zones, indicating that the performance of these large companies has attracted investor interest, potentially driving their stock prices higher and enhancing market vitality.
- Nasdaq Divergence: While the Nasdaq remains below key support levels, some AI-related stocks are reviving, indicating a potential rebound in tech stocks that may provide new investment opportunities for investors.
- Market Sentiment Improvement: The overall market sentiment is improving, as optimistic expectations for future economic growth may encourage more capital to flow into the stock market, thereby driving further increases in the overall market.
See More
TSMC Reports Continued Growth in Q4 Earnings
- Significant Revenue Growth: TSMC's Q4 revenue reached $33.73 billion, reflecting a 25.5% year-over-year increase, demonstrating strong demand in the semiconductor market and reinforcing its leadership position.
- Strong Profit Margins: The company reported a profit margin of 48.3%, indicating its competitive advantage in high-end chip manufacturing, effectively controlling costs while achieving high returns.
- Advanced Process Technology: In 2023, over half of TSMC's revenue came from chips larger than 7nm, with significant increases in the production of 3nm and 5nm chips, as 3nm chips accounted for 28% of total shipments, showcasing ongoing investment in technological innovation.
- Robust Market Demand: With the rapid advancement of artificial intelligence technologies, TSMC is experiencing increasing customer demand, solidifying its status as the world's largest chip foundry and is expected to benefit from the growth in AI infrastructure investments.
See More
TSMC: The Winner in the AI Era
- Market Growth Potential: According to Fortune Business Insights, the AI market is projected to grow from $375.9 billion this year to $2.48 trillion by 2034, representing a compound annual growth rate of 26.6%, which presents significant opportunities for related companies.
- TSMC's Industry Position: As the world's largest semiconductor foundry, TSMC produced over 11,800 products across 288 different processes in 2024, demonstrating its unparalleled influence and customer base in the industry.
- Strong Financial Performance: TSMC reported fourth-quarter revenue of $33.73 billion, a 25.5% increase year-over-year, with a profit margin of 48.3%, indicating robust profitability in a rapidly growing market.
- Technological Advancements and Market Demand: TSMC derived over half of its revenue from chips larger than 7 nanometers in 2023, but has significantly increased production of 3nm and 5nm chips, which now account for 28% and 35% of total shipments respectively, showcasing its agility in adapting to technological advancements and market demand shifts.
See More
Analysis of Investment Opportunities in Artificial Intelligence
- Hardware Companies Surge: Companies like Nvidia, Broadcom, and Taiwan Semiconductor are profiting from AI demand, with Nvidia's GPUs being the preferred choice for AI workloads; AI spending is projected to reach $3 trillion to $4 trillion by 2030, indicating significant market potential.
- Cloud Computing Market Expansion: Major cloud providers such as Amazon, Google, and Microsoft are heavily investing in data centers to meet the demand for computing power from AI developers, with Microsoft Azure achieving a growth rate of 39% in Q2 FY 2026, showcasing its competitive edge in the market.
- Recurring Revenue Stream: The rental model of cloud computing provides these companies with a continuous revenue stream; while they need to regularly replace computing units, the initial investment in infrastructure is already covered, leading to a substantial increase in future profitability.
- Intensifying Market Competition: As AI hardware and cloud computing rapidly evolve, competition among related companies will intensify, prompting investors to monitor these firms' performance in technological innovation and market share.
See More
AI Computing Hardware Demand Expected to Surge Through 2030
- Market Demand Growth: AI computing hardware demand is expected to surge through 2030, with cloud computing companies being key drivers, indicating that AI remains a leading investment theme attracting significant capital inflows.
- Hardware Investment Opportunities: Companies like Nvidia, Broadcom, and Taiwan Semiconductor are excelling in the AI hardware space, with Nvidia's GPUs widely used for AI workloads, known for their high performance despite higher costs, while Broadcom's ASIC designs offer more cost-effective solutions, with AI semiconductor revenue expected to double by Q1 2026.
- Cloud Computing Infrastructure: Amazon, Google, and Microsoft are the major cloud providers, with Microsoft Azure achieving a 39% growth rate in Q2 FY 2026; although AWS is growing slower, all three are actively investing in data centers to meet rising demand, ensuring a continuous revenue stream.
- Long-Term Investment Potential: With AI spending projected to reach $3 trillion to $4 trillion by 2030, the combination of cloud computing and AI hardware presents enormous long-term return potential for investors, especially as infrastructure builds out, significantly enhancing profitability.
See More
Micron Technology Emerges as Wall Street's New AI Chip Favorite
- Massive Market Potential: According to Bloomberg Intelligence, the total addressable market for AI accelerators is expected to grow at a 16% CAGR, reaching $604 billion by 2033, providing strong market support for Micron Technology.
- Surging Memory Demand: Micron dominates in high-bandwidth memory (HBM), dynamic random access memory (DRAM), and NAND chips, with forecasts indicating the memory market could grow to $100 billion by 2028, highlighting the accelerating demand for memory chips.
- Capital Expenditure Driving Price Increases: With big tech expected to spend over $500 billion on AI infrastructure, shortages in HBM solutions are anticipated, with TrendForce research suggesting DRAM and NAND prices could soar by 60% and 38%, respectively, in Q1 alone.
- Attractive Valuation: Micron currently trades at a forward P/E ratio of 12, significantly lower than other leaders in the AI chip market, and combined with the multi-year supercycle for HBM chips, this indicates strong investment potential for Micron stock.
See More
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- Dow Index Milestone: The Dow Jones Industrial Average has surpassed 50,000 for the first time, marking a significant recovery in the U.S. stock market, reflecting increased investor confidence in economic recovery, which may lead to more capital inflows into equities.
- Buying Opportunities: Stocks like JPMorgan, Apple, and Boeing have entered buy zones, indicating that the performance of these large companies has attracted investor interest, potentially driving their stock prices higher and enhancing market vitality.
- Nasdaq Divergence: While the Nasdaq remains below key support levels, some AI-related stocks are reviving, indicating a potential rebound in tech stocks that may provide new investment opportunities for investors.
- Market Sentiment Improvement: The overall market sentiment is improving, as optimistic expectations for future economic growth may encourage more capital to flow into the stock market, thereby driving further increases in the overall market.
See More
