Taiwan Semiconductor Manufacturing (NYSE:TSM), the world’s largest chipmaker, recently posted impressive revenue figures for March. Notably, Nvidia (NASDAQ:NVDA), which has gained 242.5% in the past year, relies on TSM for chip manufacturing. However, TSM’s stock performance (up 71.5% over the same period; see the comparison image below) has been relatively subdued. This begs the question: can TSM replicate NVDA’s stellar performance? The answer is likely a “yes.”
With the ongoing AI boom, increased funding from the U.S., and an attractive valuation, TSM looks like a compelling buy right now.
Pre-Earnings Numbers Point to Positive Outlook for Upcoming Earnings
On April 10, TSM unveiled impressive revenue figures for March, marking 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). Additionally, Q1 revenues are projected to increase by 16.5% year-over-year, reaching 592.6 billion New Taiwan dollars (around $18.4 billion).
It’s worth noting that TSM anticipates mid-20% revenue growth for FY 2024, fueled by strong demand for its latest nano chips amid the AI surge. Moreover, the company reaffirmed in January 2024 that its AI revenues are growing rapidly at approximately 50% annually. This reaffirmation is particularly reassuring following the revenue decline reported in 2023.
TSM manufactures the chips and supplies them to tech titans like Nvidia, Advanced Micro Devices (NASDAQ:AMD), and Apple (NASDAQ:AAPL). Ahead of its Q1 earnings release expected on April 18, let’s take a look at what the future holds for TSM.
AI Revolution Will Spur Growth at TSM
The AI revolution has taken the world by storm. I firmly believe that its growth trajectory is enduring. The AI industry, still in its infancy, is projected to witness remarkable expansion across diverse industries and applications. According to Next Move Strategy Consulting, the industry is anticipated to burgeon into a $1.85 trillion behemoth by 2030, compared to around $208 billion in 2023.
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