Taiwan Semiconductor Manufacturing (TSM) is sparking a rally in chip stocks Thursday after the semiconductor manufacturer beat top- and bottom-line expectations for its fourth quarter and issued a strong outlook for its first-quarter results.
At last check, TSM shares were up nearly 5%, while fellow semiconductor stocks Lam Research (LRCX) and KLA Corp (KLAC) were roughly 7% higher.
In the quarter ending December 31, the Taiwan-based chip manufacturer, whose clients include Magnificent 7 stocks Nvidia (NVDA) and Apple (AAPL), said revenue increased 37% year over year to $26.9 billion. Its earnings per share (EPS) rose 55.6% from the year-ago period to $2.24.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Our business in the fourth quarter was supported by strong demand for our industry-leading 3 nanometer and 5 nanometer technologies," said Taiwan Semiconductor Chief Financial Officer Wendell Huang in a statement.
Huang added that in the first quarter, "we expect our business to be impacted by smartphone seasonality, partially offset by continued growth in AI-related demand."
Is Taiwan Semiconductor stock a buy, sell or hold?
Taiwan Semiconductor has put in an impressive performance on the price charts over the past 12 months, up 114% on a total return basis (price change plus dividends) vs the S&P 500's 26% gain. And Wall Street thinks the tech stock has more room to run.
According to S&P Global Market Intelligence, the average analyst target price for TSM stock is $236.14, representing implied upside of nearly 9% to current levels. Additionally, the consensus recommendation is a Strong Buy.
Financial services firm Needham is one of those firms with a Buy rating on TSM stock and has a $225 price target.
"We expect Taiwan Semiconductor Manufacturing's foundry business to strengthen as we do not foresee a competitive challenge for the next several years," says Needham analyst Charles Shi. "As Moore's Law [an observation that suggests the number of transistors in an integrated circuit doubles every two years] slows, we expect TSMC will need to spend aggressively in research and development and invest in capacity."
The analyst adds that he expects Taiwan Semiconductor will need to expand its operations outside of Taiwan " as the world enters a new era of superpower competition."
Related content
-
Rushing to Go Solar? Homeowners Scramble Before Trump Tax Credit CutsTax Credits With a new incoming presidential administration, is the solar energy tax credit in the hot seat?
-
Gov. Hochul Vows to Deliver $1 Billion in Tax Relief to New YorkersState Tax The proposed tax cuts would benefit New York middle-class families.
-
Asset Protection for Affluent Retirees in 2025Putting together a team of advisers to assist with insurance, taxes and other financial issues can help with security, growth and peace of mind.
-
The Tax Stakes for 2025: Planning for All PossibilitiesIt's unclear whether extending the TCJA provisions for individuals is likely, so what can you do to reduce your overall tax bill either way?
-
A Strategic Way to Address the Tax-Deferred DisconnectWhat you don't know could cost you a fortune. Here's how to make the most of a tax-deferred retirement account and possibly save your heirs a bunch on taxes.
-
Stock Market Today: Dow Pops 703 Points on Cooler InflationA benign reading from the Consumer Price Index report assuaged market fears about the path of borrowing costs.
-
CPI Report Keeps the Fed on Track: What the Experts Are Saying About InflationCPI Disinflation in key areas of consumer prices should help the Federal Reserve stick to its policy path of gradual cuts to interest rates.
-
Why Wells Fargo's Revenue Miss Isn't Worrying Wall StreetWells Fargo is one of the best S&P 500 stocks Wednesday even after the big bank's top-line miss. Here's what you need to know.
-
Citigroup Stock Jumps on Earnings, $20 Billion Stock Buyback NewsCitigroup stock is soaring Wednesday after the big bank topped earnings expectations and unveiled a massive stock buyback program. Here's why that's important.
-
Is JPMorgan Chase Stock a Buy, Hold or Sell After Earnings?JPMorgan Chase is trading higher after the big bank topped fourth-quarter earnings expectations, but is the stock a Buy? Here's what you need to know.
