Being the largest chipmaker globally, Taiwan Semiconductor Manufacturing (NYSE:TSM) recently announced remarkable revenue numbers for March. It is worth highlighting that Nvidia (NASDAQ:NVDA), with a remarkable 242.5% surge in the last year, relies on TSM for chip production. Despite this, TSM’s stock performance has been relatively restrained, with an increase of 71.5% over the same period (refer to the comparison image below). This raises the question: can TSM mimic the outstanding performance of NVDA? The prospects indicate a positive outlook.
Considering the ongoing surge in AI, amplified funding from the U.S., and an appealing valuation, TSM appears to be an attractive investment opportunity at present.
Positive Signals Ahead of Earnings Release
On April 10, TSM disclosed impressive revenue figures for March, displaying the highest month-over-month growth since November 2022 at 34.3% year-over-year, totaling 195.2 billion New Taiwan dollars (approximately $6.1 billion). Moreover, Q1 revenues are estimated to surge by 16.5% year-over-year, reaching 592.6 billion New Taiwan dollars (around $18.4 billion).
It is essential to note that TSM foresees a mid-20% revenue escalation for FY 2024, driven by the robust demand for its latest nano chips amidst the surge in AI. Furthermore, the company reaffirmed in January 2024 that its AI revenues are expanding rapidly at a rate of approximately 50% annually. This reiteration is particularly comforting following the revenue dip reported in 2023.
Tasked with manufacturing chips and providing them to tech giants like Nvidia, Advanced Micro Devices (NASDAQ:AMD), and Apple (NASDAQ:AAPL), let’s explore what the future holds for TSM ahead of its Q1 earnings announcement slated for April 18.
Anticipated Growth Triggered by AI Revolution at TSM
The AI revolution has captivated the globe with its widespread impact. I am staunch in my belief that its growth trajectory is sustainable. The AI sector, though still nascent, is anticipated to witness substantial expansion across various industries and applications. As per Next Move Strategy Consulting, the sector is projected to burgeon into a $1.85 trillion giant by 2030, in contrast to approximately $208 billion in 2023.
The clients of TSM heavily depend on the firm for manufacturing the chips they design. The surge in demand for all things AI has driven a significant increase…
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