On Monday, Taiwan Semiconductor Manufacturing Company (NYSE: TSM) shares, also known as TSMC, are expected to raise its full-year revenue forecast into the high 20 percent range, according to an analyst at Cantor. This follows second-quarter revenues that topped the high end of the company's guidance.
The leading semiconductor company is also anticipated to increase its capital expenditure (capex) forecast to at least the high end of its $28-32 billion guidance to maintain a consistent capex-to-sales ratio.
TSMC's growth is further supported by the expansion of its 3nm technology customers, which now include tech giants AMD (NASDAQ:AMD) and Intel (NASDAQ:INTC), alongside Apple (NASDAQ:AAPL). This customer diversification is projected to boost 3nm technology's contribution to over 20% of TSMC's total revenues in the calendar year 2024, surpassing the previous mid-teens expectation. The company's investment in advanced 3/2nm technologies is likely to continue into 2025, reflecting confidence in the future demand for these cutting-edge processes.
High-performance computing (HPC) is becoming increasingly aligned with TSMC's leading-edge node technology. The integration of HPC with the latest technology nodes represents a transformative shift for the semiconductor industry, with HPC and Apple serving as primary drivers for the adoption of new manufacturing processes at TSMC.
Market participants are also keenly awaiting details on the anticipated price increases set to take effect on January 1, 2025. These changes are expected to have a significant impact on TSMC's long-term gross margin (GM) outlook. As the company prepares to release its earnings, these strategic updates are likely to be at the forefront of discussions with investors and analysts.
In other recent news, Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) has seen a series of price target increases from financial firms. Needham raised TSMC's target to $210, citing expected revenue growth and continued emphasis on capital efficiency. Morgan Stanley increased its price target for TSMC due to strong demand for Apple's AI semiconductors and advancements in wafer pricing.
Additionally, Bernstein SocGen Group raised its target, expecting a surge in TSMC's full-year revenue and EPS for 2024 due to high demand for high-end phones and advanced nodes. Susquehanna upped TSMC's price target, highlighting the company's industry leadership in the N3, N4, and N5 semiconductor nodes.
TSMC's Q1 2024 earnings showed a sequential revenue decline but an increase in gross margin. The company's Q2 revenue is forecasted between USD 19.6 billion and USD 20.4 billion, with a gross margin of 51% to 53%. TSMC's N2 technology is expected to start volume production in 2025, with AI processors predicted to significantly drive revenue growth in the coming years. These are recent developments for TSMC.
InvestingPro Insights
As TSMC gears up to potentially raise its full-year revenue forecast, the company's financial health remains a focal point for investors. With a robust market capitalization of $827.42 billion, TSMC shows a commanding presence in the semiconductor industry. The company's P/E ratio stands at 31.47, reflecting investor confidence in its earnings capacity. This is further substantiated by a consistent P/E ratio of 31.45 over the last twelve months as of Q1 2024.
Notably, TSMC's dedication to innovation and expansion, as highlighted by its 3nm technology and customer diversification, is mirrored in its significant revenue of $70.23 billion over the same period. Despite a slight revenue decline of 1.56% in the last twelve months, the company has demonstrated a strong quarterly revenue growth of 16.52% in Q1 2024, indicating a positive short-term trajectory. Moreover, the company's gross profit margin stands at an impressive 53.57%, showcasing its ability to efficiently manage production costs and sustain profitability.
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