Investment Rating - The report maintains a "Buy" rating for TSMC, with a target price of $242, corresponding to a market value of $125.71 billion [1]. Core Views - TSMC's Q3 2024 performance exceeded expectations, with revenue of $23.5 billion and a year-over-year growth of 39%. The gross margin reached 57.8%, surpassing the upper limit of guidance [1]. - The demand for AI is robust, particularly in high-performance computing (HPC), which accounted for 51% of TSMC's revenue in Q3 2024. The company anticipates rapid capacity ramp-up due to increased capital expenditures and new factory openings [1][10]. - TSMC's advanced process technology, particularly 3nm and 5nm, continues to contribute significantly to revenue, with a combined share of 69% of total wafer revenue [1]. Financial Summary - Revenue projections for TSMC are as follows: NT$2,871.67 billion for 2024, NT$3,455.95 billion for 2025, and NT$4,070.72 billion for 2026, reflecting year-over-year growth rates of 33%, 20%, and 18% respectively [1][10]. - Net profit estimates are NT$1,157.60 billion for 2024, NT$1,489.09 billion for 2025, and NT$1,738.76 billion for 2026, with growth rates of 38%, 29%, and 17% respectively [1][10]. - The report indicates a gross margin of 55.8% for 2024, expected to improve to 57.3% by 2026 [10]. Business Segments - Revenue contributions from various segments in 2024 are projected as follows: HPC at NT$140.67 billion, smartphones at NT$105.48 billion, IoT at NT$17.31 billion, automotive at NT$13.86 billion, and digital consumer electronics at NT$4.64 billion [10]. - Year-over-year growth rates for these segments are expected to be 50% for HPC, 29% for smartphones, 7% for IoT, 4% for automotive, and a slight decline of 1% for digital consumer electronics [10]. Guidance - For Q4 2024, TSMC's revenue guidance is set between $26.1 billion and $26.9 billion, with a gross margin forecast of 57.0% to 59.0% [1].

Investment Rating - The report maintains a "Buy" rating for TSMC, expecting the stock price to outperform the industry index by over 15% in the next six months [10] Core Views - TSMC's performance is driven by strong demand from AI and advanced semiconductor technologies, with revenue guidance for 2024 being raised to approximately 30% growth [5][6] - The company reported a significant increase in Q3 2024 revenue and net profit, with revenue reaching 759.69 billion NTD, up 39% year-over-year, and net profit at 325.26 billion NTD, up 54.2% year-over-year [1][2] Financial Summary - Revenue (Million USD): - 2022A: 73,670 - 2023A: 70,599 - 2024E: 91,687 - 2025E: 116,240 - 2026E: 138,749 - Year-over-Year Growth Rate (%): - 2022A: 28.7 - 2023A: -4.2 - 2024E: 29.9 - 2025E: 26.8 - 2026E: 19.4 [1] - Net Profit (Million USD): - 2022A: 32,311 - 2023A: 27,816 - 2024E: 36,108 - 2025E: 48,530 - 2026E: 58,347 - Year-over-Year Growth Rate (%): - 2022A: 51.3 - 2023A: -13.9 - 2024E: 29.8 - 2025E: 34.4 - 2026E: 20.2 [1] - Gross Margin: - Q3 2024: 57.8%, exceeding previous expectations of 53.5% to 55.5% [2] - R&D and SG&A Expense Ratios: - R&D: 6.95% - SG&A: 3.46% [2] Market Position and Growth Drivers - Advanced process nodes (7nm and below) accounted for 69% of total wafer revenue in Q3 2024, with 3nm, 5nm, and 7nm processes contributing 20%, 32%, and 17% respectively [2] - The company anticipates that AI demand will continue to drive growth in the semiconductor industry, with healthy growth expected in smartphones and PCs [5][6] - TSMC's advanced packaging business is projected to grow significantly, with CoWoS capacity expected to double year-over-year [2]

The dominant manufacturer is extending its lead over rivals.Taiwan Semiconductor Manufacturing (TSM 1.20%) just reached rarified air. The semiconductor giant -- known as TSMC -- just surpassed a market cap of $1 trillion after reporting phenomenal growth for the third quarter. Excluding state-owned enterprises, this is the ninth company in the world to reach a market value above $1 trillion. Benefitting directly from growing spending on artificial intelligence (AI) computer chips, TSMC is dominating the sem ...

Taiwan Semiconductor Manufacturing Company Limited (TSM) , or TSMC, known for making the smallest and most power-efficient chips saw its shares surge recently after its latest quarterly profits soared on artificial intelligence (AI) demand. Its shares are further expected to scale northward primarily due to three major reasons. Let's look at those and what makes the TSM stock a compelling buy at the moment – TSMC's Positive Q3 Results & Outlook Boosts Share Price In the third quarter, TSMC registered a rema ...

Will the world's largest contract chipmaker split its high-flying stock?Many of the world's largest tech companies routinely split their stocks as their share prices rise. Splits don't make a stock fundamentally cheaper, since they simply cut its existing shares into smaller slices which trade at lower prices. So instead of buying a whole pizza for $20, you're simply getting a quarter of a slice for $5.Yet stock splits still attract a lot of attention from smaller investors who aren't willing to pay hundred ...

TSMC's stock is trading at an all-time high, but the room for growth remains large.Plenty of notable companies have had a good 2024, but few have had as good a year as Taiwan Semiconductor Manufacturing Company (TSM -1.72%) (TSMC). The world's leading semiconductor company has seen its stock price double this year, with plenty of momentum on its side.Going from a $500 billion company to a $1 trillion company is no small feat, but that's exactly what TSMC has managed to do this year. It joins an elite club c ...

Parkev Tatevosian, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool. ...

The logo for Taiwan Semiconductor Manufacturing Company is displayed on a screen on the floor of the New York Stock Exchange on Sept. 26, 2023. Taiwan Semiconductor Manufacturing Company has denied that the U.S. was investigating its dealings with Chinese tech company Huawei, following reports that its chips were found in the Shenzhen-based firm's products. "TSMC is a law-abiding company and we are committed to complying with all applicable rules and regulations, including applicable export controls," a com ...

Investment Rating - The report maintains a "Buy" rating for TSMC (2330.TT) and TSM (TSM.US) with target prices of NT$1,273.5 and US$228.8 respectively, indicating potential upside of 17% and 13% [5][14]. Core Insights - TSMC's third-quarter gross margin exceeded market expectations, driven by strong AI demand, which is expected to boost gross margins further in the fourth quarter [5][6]. - The company has raised its revenue growth guidance for the year to nearly 30% and increased its capital expenditure forecast to slightly above US$32 billion, indicating it is still in an upward semiconductor cycle [6]. - TSMC's sales revenue for Q3 was NT$759.69 billion, a 39% year-on-year increase and a 13% quarter-on-quarter increase, surpassing market consensus [10]. - The gross margin for Q3 was 57.8%, up 3.6 percentage points year-on-year and 4.7 percentage points quarter-on-quarter, significantly above market expectations [10]. Financial Performance Summary - **Revenue and Growth**: TSMC's revenue for 2023 is projected at NT$2,161.736 million, with a year-on-year decline of 5%. However, revenue is expected to rebound with a growth of 33% in 2024 and 28% in 2025 [7]. - **Profitability Metrics**: The gross margin is expected to improve to 55.8% in 2024 and 57.8% in 2025, with net profit projected to grow by 36% in 2024 and 33% in 2025 [7][13]. - **Earnings Per Share**: Basic earnings per share are forecasted to be NT$44.6 in 2024 and NT$59.3 in 2025, reflecting a strong recovery [7][13]. Earnings Guidance - For Q4, TSMC expects revenue to reach NT$848 billion, a 36% year-on-year increase and a 12% quarter-on-quarter increase, driven by sustained AI-related demand [10][12]. - The gross margin guidance for Q4 is set at 58.0%, indicating a 5.0 percentage point year-on-year increase [10][12]. Valuation - The report employs an EV/EBITDA valuation method, assigning TSMC a target EV/EBITDA of 16.5x under a base case scenario for 2024, leading to a target price of NT$1,273.5 [14][15]. - The valuation reflects a premium over TSMC's historical averages, suggesting a favorable investment outlook [14][15].

Investment Rating - The report indicates a strong performance with revenue exceeding guidance, suggesting a positive investment outlook for the company [1][2]. Core Insights - The company reported Q3 2024 revenue of NT$759.69 billion (US$23.5 billion), a year-over-year increase of 36% and a quarter-over-quarter increase of 12.9%, driven by strong demand in the smartphone and AI sectors for advanced processes [2][7]. - Gross margin for Q3 2024 was 57.8%, up 4.6 percentage points quarter-over-quarter and 3.5 percentage points year-over-year, benefiting from improved capacity utilization and cost optimization [2][7]. - Net profit attributable to shareholders reached NT$325.26 billion, reflecting a quarter-over-quarter increase of 31.2% and a year-over-year increase of 54.2% [2][7]. - The company expects Q4 2024 revenue to be between US$26.1 billion and US$26.9 billion, with a gross margin forecast of 57% to 59% [2][18]. Summary by Relevant Sections Overall Revenue Situation - Q3 2024 revenue was NT$759.69 billion (US$23.5 billion), exceeding the upper guidance of US$22.4-23.2 billion, driven by strong demand for 3nm and 5nm processes [2][7]. - Gross margin was 57.8%, surpassing the previous guidance of 53.5%-55.5% [2][7]. - Net profit margin was 42.8%, with a significant increase in earnings per share to NT$12.54 [2][7]. Revenue Breakdown by Market - Revenue by platform: Smartphones accounted for 34% (QoQ +16%), HPC 51% (QoQ +11%), IoT 7% (QoQ +35%), Automotive 5% (QoQ +6%), Digital Consumer Electronics 1% (QoQ -19%) [2][14]. Revenue Breakdown by Process Technology - Revenue from 3nm process accounted for 20% (QoQ +5 percentage points), 5nm for 32% (QoQ -3 percentage points), and 7nm for 17% [2][14]. - Advanced processes (7nm and below) contributed to 69% of total wafer revenue [2][14]. Capital Expenditure - Capital expenditure for Q3 2024 was approximately US$6.4 billion, with a full-year budget expected to exceed US$30 billion, focusing on advanced process technologies [2][12][20]. Inventory - Inventory days at the end of Q3 2024 were 87 days, an increase of 4 days, primarily due to stocking for 3nm and 5nm wafers [2][13]. Company Guidance - For Q4 2024, the company projects revenue between US$26.1 billion and US$26.9 billion, with a gross margin of 57%-59% [2][18].