Home News Apple supplier TSMC surges on better-than-expected outlook and anticipated AI profits in 2024

Apple supplier TSMC surges on better-than-expected outlook and anticipated AI profits in 2024

by SuperiorInvest

Key takeaways

  • Apple supplier Taiwan Semiconductor Manufacturing Company released a better-than-expected outlook for 2024, anticipating gains from the rise of artificial intelligence (AI).
  • Analysts at Wedbush and Jefferies noted that the chipmaker’s prospects for 2024 are heavily influenced by TSMC’s role in artificial intelligence technology, as well as its relationship with Apple.
  • TSMC’s American Depository Receipts rose more than 7% in intraday trading on Thursday after reporting its latest results.

Taiwan Semiconductor Manufacturing Company’s (TSM) American Depositary Receipts (ADR) rose more than 7% in intraday trading on Thursday after the company released a better-than-expected outlook for 2024, anticipating gains from the artificial intelligence boom (AI).

TSMC, the world’s largest foundry or semiconductor manufacturer for other companies by revenue, supplies semiconductors to many “fabless” companies and chip designers, including Apple (AAPL), Nvidia (NVDA), and Qualcomm (QCOM), for use them in your products.

The chipmaker reported fiscal 2023 fourth-quarter earnings per share (EPS) of $1.44 and revenue of $19.62 billion, down from the same period a year earlier but in line with estimates. analyst projections and slightly above the company’s previous forecast of between $18.8 billion and $19.6. billion.

“Our business in the fourth quarter was supported by the continued strong advancement of our industry-leading 3-nanometer technology,” said Wendell Huang, vice president and chief financial officer (CFO) of TSMC.

The company also said it expects between $18 billion and $18.8 billion in revenue in the first quarter of 2024, more than $1.25 billion higher than its revenue in the first quarter of 2023. For the full year, TSMC said it anticipates revenue to rise in the low to mid-20% range as the overall semiconductor market improves.

“Just like Taiwan is a great country for semiconductors[s]can be a great country for artificial intelligence in the future,” said Mark Liu, CEO of TSMC, noting that “AI is only in its nascent stage” and that the company sees current innovation in AI as “the leading edge.” of the iceberg” for technology.

Management added that TSMC’s capital budget for 2024 will be between $28 billion and $32 billion, the bulk of which will be allocated to advanced process technologies, noting that higher levels of capital expenditures at TSMC have generally correlated with greater growth opportunities in subsequent years.

Wedbush analysts said they “view this more bullish outlook as based on a combination of optimism around a growing contribution from AI, better expectations for traditional end-market trends in 2024 (with comps benefiting from streamlining of inventories by customers) and profits from TSMC shares.”

Jefferies analysts said TSMC’s “full-year outlook is much better than expected” due to several factors, including Apple’s increased business “as all iPhone models will be equipped with TSMC’s N3 process.” “. The firm noted that “AI continues to be the fastest growing area at TSMC.”

TSMC ADRs rose 7.3% to $110.41 at approximately 12:25 pm ET Thursday following the news. They have gained more than 23% over the past year.

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