Taiwan Semiconductor Manufacturing (TSM) stock is soaring Thursday and is on track to close with a trillion-dollar market cap for the first time ever. This comes after the integrated circuits and chip manufacturer beat top- and bottom-line expectations for its third quarter and issued a strong outlook for its fourth quarter.
In the three months ended September 30, the Taiwan-based company, whose clients include Magnificent 7 stocks Nvidia (NVDA) and Apple (AAPL), said net revenue increased 36% year-over-year to $23.5 billion. Earnings per share (EPS) were up 50.4% from the year-ago period to $1.94.
The results exceeded analysts' expectations for revenue of $23.1 billion and EPS of $1.80, according to Yahoo Finance.
"Our business in the third quarter was supported by strong smartphone and AI-related demand for our industry-leading 3 nanometer and 5 nanometer technologies," said Taiwan Semiconductor Chief Financial Officer Wendell Huang in a statement. "Moving into fourth quarter 2024, we expect our business to continue to be supported by strong demand for our leading-edge process technologies."
For Q4, TSM said it anticipates revenue in the range of $26.1 billion to $26.9 billion. This is well ahead of the $24.9 billion in sales Wall Street is anticipating.
Is Taiwan Semiconductor stock a buy, sell or hold?
Taiwan Semiconductor has had a stellar run on the price charts in 2024, more than doubling in value for the year to date. Unsurprisingly, analysts are very bullish on the semiconductor stock.
According to S&P Global Market Intelligence, the average analyst target price for TSM stock is $219.01, representing implied upside of nearly 4% to current levels. Additionally, the consensus recommendation is Strong Buy.
Speaking for the bulls is financial services firm Needham, which has a Buy rating and $210 price target on TSM stock.
"We look for TSMC's revenue growth, primarily driven by steady introductions of new technology nodes that are largely unaffected by industry cyclicality, to remain strong and support a 15-20% earnings compound annual growth rate (CAGR) over the next few years," says Needham analyst Charles Shi. "As such, we recommend TSM stock as a core holding for investors who look to invest in semiconductors, which we view as the foundation of the expanding digital economy."
