What's Going On With Apple Supplier Taiwan Semi Stock On Thursday?

Zinger Key Points
  • TSMC beats Q1 expectations with a 16.5% revenue jump, driven by AI firm demand.
  • Apple and Nvidia highlighted as key TSMC clients, with significant contributions to revenue.

Thanks to robust demand from artificial intelligence firms, Taiwan Semiconductor Manufacturing Co TSM exceeded first-quarter financial expectations.

The company’s revenue surged 16.5% to $18.87 billion, surpassing the Street consensus estimate of $18.40 billion, while net income increased by 8.9% to $6.97 billion. The stock price declined after the Q1 print.

Advanced technologies, particularly those beyond the 7-nanometer process, contributed 65% of TSMC’s total revenue. 

Notably, Apple Inc AAPL, TSMC’s largest client, has reportedly reserved the majority of TSMC’s initial 2-nanometer production capacity for developing advanced processors, which made up 25% of TSMC’s annual revenue in 2023. 

Nvidia Corp NVDA also stands out as a critical customer, accounting for approximately 11% of TSMC’s revenue.

CFO Wendell Huang forecasted a robust second quarter for 2024, highlighting the anticipated support from solid demand for their cutting-edge 3-nanometer and 5-nanometer technologies despite the seasonal fluctuations in smartphone demand.

CEO C.C. Wei projected a “healthy” growth year for 2024, driven by TSMC’s technological leadership and expanded customer base. He emphasized the overwhelming demand for energy-efficient computing power from AI innovators collaborating with TSMC, expecting server AI processors’ revenue contribution to more than double within the year, CNBC cites from TSMC’s earnings call.

TSMC’s second-quarter revenue will likely range between $19.6 billion and $20.4 billion, versus the analyst consensus of $19.3 billion. Due to the AI frenzy, the company expects sales growth of up to 30%. 

For the second quarter, TSMC foresees robust demand for its cutting-edge 3 nanometer (nm) and 5nm technologies bolstering its business. However, a slowdown in smartphone demand will counter this, Reuters cites from the earnings call.

TSMC anticipates that AI servers will represent a low-teens percentage of its 2024 revenue, doubling from the previous year, and projects this contribution to exceed 20% by 2028. The company has revised its outlook for auto chip demand, forecasting a decline this year instead of the previously expected growth.

TSMC has reaffirmed its capital expenditure forecast for this year at $28 billion—$32 billion, allocating 70%- 80% of this investment to advanced technologies. The company predicts a revenue increase in the low—to mid-20% range in U.S. dollar terms for 2024. 

Analysts view TSMC’s position favorably, with Brady Wang from Counterpoint Research citing the sustained demand for advanced AI chips as a positive indicator for both immediate and long-term growth. 

TSMC stock gained 58% in the last 12 months. Investors can gain exposure to the stock via VanEck Semiconductor ETF SMH and Vanguard FTSE Emerging Markets ETF VWO.

Price Action: TSM shares closed lower by 4.07% at $133.47 on the last check Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo by Jack Hong via Shutterstock

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: EarningsNewsGuidanceTechMediaAI GeneratedBriefsBZ Data ProjectStock BattlesStories That Matter
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!