Taiwan Semiconductor Exceeds Q3 Earnings Expectations with TSM Stock Rise
Taiwan Semiconductor Manufacturing Company (TSMC) reported impressive earnings for the third quarter of 2023, surpassing analyst expectations. The company’s stock responded positively, increasing in early trading.
Q3 Financial Performance
TSMC earned $2.92 per share, significantly outperforming analysts’ predictions, which had estimated earnings of $2.63 per share. The company generated a total revenue of $33.1 billion, exceeding the expected $32.07 billion. This marks a considerable increase from the previous year’s earnings of $1.95 per share and sales of $23.62 billion.
- Earnings per Share: $2.92
- Analyst Estimate: $2.63
- Sales: $33.1 billion
- Previous Year Sales: $23.62 billion
Year-over-Year Growth
In local currency, TSMC’s earnings rose by 39% year-over-year, with sales increasing by 30.3%. For the current quarter, they project revenues to be between $32.2 billion and $33.4 billion, surpassing Wall Street’s target of $31.55 billion.
Stock Performance
TSMC shares increased by 1.6%, reaching $309.64 during premarket trading. Earlier this year, the stock broke out of a flat base at a buy point of $248.28 on September 9. A record high of $307.30 was achieved on October 6.
Industry Demand and Technological Advancements
Chief Financial Officer Wendell Huang attributed TSMC’s strong performance to robust demand for the company’s advanced process technologies. He anticipates continued strong demand into the fourth quarter. In Q3, shipments of 3-nanometer chips represented 23% of wafer revenue, while 5-nanometer chips accounted for 37%. In total, chips with 7-nanometer technology and smaller contributed 74% to the overall revenue.
Client Base
TSMC is known for producing chips for major technology companies, including:
- AMD
- Apple
- Broadcom
- Nvidia
- Qualcomm
The surge in AI data center chip manufacturing, particularly for Nvidia, has significantly benefited TSMC’s production levels.
Market Outlook and Analyst Ratings
Needham analyst Charles Shi reaffirmed a buy rating for TSMC stock, raising the price target to $360 from an earlier $270. He noted that the company’s robust Q3 results stemmed from enhanced AI chip production, operational efficiency, and disciplined capital management.
TSMC stock is featured on four prominent IBD lists, including IBD 50, Stock Spotlight, Global Leaders, and Tech Leaders.
