Shares of Taiwan Semiconductor Manufacturing (TSM 3.86%) gained 3.9% on Thursday, following the world's largest contract semiconductor manufacturer's release of its fourth-quarter 2024 report. The stock's rise is likely in part due to the company beating Wall Street's Q4 revenue and earnings expectations. But the bulk of the rise is probably attributable to management's forecast for continued strong demand in 2025 and beyond for its services to produce artificial intelligence (AI) chips for its customers.To ...

Investment Rating - The report maintains a "Buy" rating for TSMC (2330.TT) and TSM (TSM.US) with target prices of NT$1,401.1 and US$256.3 respectively, indicating potential upside of 27% and 24% [1][13]. Core Insights - TSMC is expected to benefit significantly from the ongoing AI demand, which is projected to drive revenue growth in the coming years. The company anticipates a compound annual growth rate (CAGR) of 40% for AI-related revenue over the next five years, contributing to an overall revenue CAGR of 20% [6][9]. - The company has revised its earnings forecasts upward for 2025 and 2026, with a projected net profit growth of 33% in 2025 [1][11]. Financial Projections - Revenue projections for TSMC from 2023 to 2027 are as follows: - 2023: NT$2,161,736 million - 2024: NT$2,894,308 million (34% YoY growth) - 2025E: NT$3,713,586 million (28% YoY growth) - 2026E: NT$4,570,688 million (23% YoY growth) - 2027E: NT$5,509,213 million (21% YoY growth) [2][7]. - Gross margin is expected to remain robust, with projections of 58.3% in 2025 and maintaining above 53% in the long term [6][11]. Earnings and Valuation Metrics - The report forecasts the following earnings per share (EPS) for TSMC: - 2023: NT$32.8 - 2024: NT$45.2 - 2025E: NT$60.0 - 2026E: NT$72.5 - 2027E: NT$86.8 [2][11]. - The target price is based on an EV/EBITDA multiple of 14x under the base case scenario, which aligns with historical averages [13][14]. Recent Performance and Guidance - TSMC's Q4 2024 results showed a revenue increase of 39% YoY and a net profit increase of 57% YoY, driven by strong demand for 3nm and 5nm technology nodes [9][10]. - For Q1 2025, TSMC has provided guidance indicating a revenue growth of 41% YoY, despite a seasonal decline due to smartphone demand [6][10].

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected price increase of over 15% in the next 6-12 months [3]. Core Insights - The company reported a revenue of $26.884 billion for Q4 2024, representing a year-on-year increase of 38.8%, with a gross margin of 59.0%, up by 6.0 percentage points [1]. - The company expects Q1 2025 revenue to be between $25 billion and $25.8 billion, reflecting a quarter-on-quarter decline of 5.5% but a year-on-year growth of 34.6% [1]. - The company anticipates a mid-20s revenue growth rate for the full year of 2025, with a projected CAGR of 20% over the next five years [1]. - The semiconductor industry is expected to grow at approximately 10% in 2025 [1]. Performance Analysis - The revenue contribution from advanced processes continues to rise, with 3nm, 5nm, and 7nm processes accounting for 26%, 34%, and 14% of wafer manufacturing revenue in Q4 2024, respectively [1]. - The company expects to commence mass production of the N2 process in the second half of 2025, with N2P and A16 processes expected to follow in the second half of 2026 [1]. - The company's HPC revenue is experiencing high growth, with AI-related revenue expected to double in 2025, achieving a CAGR of around 45% over the next five years [2]. - The advanced packaging segment is projected to grow from 8% in 2024 to 10% in 2025 [2]. Financial Forecasts - The company is projected to achieve net profits of $48.776 billion, $59.662 billion, and $65.470 billion for the years 2025, 2026, and 2027, respectively, with corresponding P/E ratios of 22, 18, and 16 [3]. - Revenue forecasts for the company are $70.626 billion in 2024, $89.748 billion in 2025, and $115.127 billion in 2026, with growth rates of 27.1% and 28.3% for 2024 and 2025, respectively [6].

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Core Viewpoint - The investment strategy focuses on fundamental, bottom-up analysis with an emphasis on long-term quality growth, targeting companies in niche markets with strong growth potential and reasonable valuations [1]. Group 1: Investment Strategy - The investment style is characterized by a fundamental approach, prioritizing quality growth-oriented companies [1]. - The portfolio typically consists of 15-20 stocks, emphasizing diversification, risk management, and macro-driven sector weights [1]. - The target annual return for the portfolio is set at 15% [1]. Group 2: Company Characteristics - The ideal companies for investment are those with strong management teams, sound capital allocation policies, and reasonable valuations [1]. - There is a specific focus on companies that specialize in niche markets, which are believed to have strong growth potential [1].

Taiwan Semiconductor ((TSM), the world’s largest and most advanced chipmaker, has once again showcased its critical role in powering the AI revolution. Reporting a stellar fourth quarter with a 38.8% year-over-year revenue increase and a 57% surge in net income, TSM’s results highlight the insatiable demand for its cutting-edge 3nm and 5nm chips. These chips are the backbone of AI giants like Nvidia ((NVDA), whose GPUs dominate the market, and Apple ((AAPL), which relies on TSMC to produce its A-series and ...

Shares of Taiwan Semiconductor Manufacturing Corporation (TSM 4.97%) were moving higher Thursday after the world's largest contract chip manufacturer posted better-than-expected results in its fourth-quarter earnings report.As of 12:20 p.m. ET, the stock was up by 5.2%. TSMC can't be stoppedTSMC has been a big winner amid the AI boom and a broader recovery in the chip sector, and that momentum continued in the fourth quarter.Revenue in the period jumped 38.8% to $26.9 billion, topping analysts' consensus es ...

Needham analyst Charles Shi reiterated Taiwan Semiconductor Manufacturing Co TSM with a Buy and a $225 price target.Taiwan Semiconductor guided 2025 revenue growth to be in the mid-20s percent range, primarily in line with consensus.More interestingly, management guided AI revenue to double in 2025 after tripling in size and reaching the mid-teens percent of the overall revenue in 2024.Also Read: OPEC’s Optimism Clashes With IEA’s Conservative 2025 Oil Growth ProjectionsTaiwan Semiconductor extended the AI ...

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Group 1 - Taiwan Semiconductor Manufacturing Company (TSMC) has significantly exceeded expectations for 2024 [1] - The strong outlook for 2025 indicates persistent demand for AI, boosting confidence in the market [1]