Semiconductor giants$Taiwan Semiconductor (TSM.US)$The latest quarterly results will be announced in advance of the US East market on April 18. Since this year, TSMC's stock price performance has been very strong, with a cumulative increase of more than 35%, once reaching a record high.

According to consistent market expectations, TSMC is expected to record revenue of NT$583,632 billion in the first quarter, up 14.75% year on year; earnings per share are NT$42.41, up 3.98% year on year.

Looking ahead to the latest quarterly report, market concerns include TSMC's future operating outlook, capital expenditure, the impact of rising electricity prices on gross margin, global layout, progress in advanced manufacturing processes, and expansion of advanced packaging production.

Earlier, TSMC released its March revenue report. In March alone, TSMC also generated revenue of 19.511 billion NTD, an increase of 34.3% over the previous year. Overall, revenue for the first quarter increased 16.5% year over year to NT$592.6 billion, while the average market forecast was NT$579.5 billion.

The report shows that, boosted by the global AI boom in demand for high-end chips and servers, TSMC's revenue growth rate in the first quarter rose to a new high in more than a year, not only at the high end of its own guidelines, but also exceeded market expectations.

This outstanding performance reinforces the belief that TSMC has resumed steady growth this year after withstanding the impact of a sharp drop in smartphone and computer sales after the COVID-19 pandemic.

TSMC also announced in January that its revenue in the field of artificial intelligence is growing rapidly by 50% compared to the same period last year. In order to meet market demand, the company is actively building new factories in the US, Japan, and Germany to supply data centers for Internet giants such as Amazon and Microsoft.

In addition, recently, there was news that TSMC will increase its capital expenditure in 2024 from the original estimate of 28 to 32 billion US dollars to 30 to 34 billion US dollars, an increase of more than 7%, and it is expected that this year's revenue will increase by at least 20%, thus reversing the slight decline in 2023.

What do you think of Wall Street?

Analysts Needham raised TSMC's target share price from $133 to $168 and maintained the buy rating. The analyst told investors in a research report that

The company lowered its earnings forecast for FY24 from $6.41 to $6.20 and warned that TSMC could face some short-term production delays and wafer losses due to the earthquake in Taiwan, China, which could adversely affect sales in the second quarter. However, TSMC should be able to make up for most of its sales losses in the third quarter and achieve its full-year growth target. He also called the stock “one of the best AI gold rush stories.”

J.P. Morgan raised TSMC's target price from NT$850 to NT$900. The bank said

It is expected that TSMC will announce healthy results for the first quarter of 2024. Revenue for the second quarter will increase 7% month-on-month, and gross margin will remain around 52%. The bank believes that TSMC may raise the capital expenditure guidance range to 30 billion to 34 billion US dollars to reflect the accelerated construction of advanced packaging and the deployment of 2 nm production capacity at the Kaohsiung plant.

The company further anticipates that FY24 revenue will reach the upper limit of the 20% moderate-slow growth guidance range, but TSMC does not expect to change the revenue guidance at the upcoming earnings conference on April 18. Overall, due to the likely rise in demand for artificial intelligence, strong demand for the 3-nm process, and the positive early response of the 2-nm process, it may release positive news. The company also believes that TSMC may reaffirm that its process technology is ahead of Intel and refute some of Intel's claims about technology and cost leadership with 18A/14A process nodes.

How did the stock price perform on previous earnings days?

According to Market Chameleon, after backtesting the past 12 quarterly results days, TSMC had a high probability of rising on the day the results were released, about 67%. The average change in stock price was ± 4.4%. The maximum increase was +9.8%, and the maximum decline was -5.5%.

Currently, TSMC's implied change is ± 6.7%, indicating that the options market rose or fell 6.7% in a single day after betting on its performance; in comparison, TSMC's average post-performance stock price change in the first 4 quarters was ± 5.2%, indicating that the current option value of the stock is overvalued.

Judging from the bias in the volatility of options, market sentiment towards TSMC is slightly bullish.

Cow friends,

TSMC's performance is coming soon.

Will this time be above expectations, in line with expectations, or below expectations?

Welcome to leave your thoughts in the comments area~

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Editor/Somer