Taiwan Semiconductor Manufacturing Corporation (NYSE:TSM) had an impressive third quarter performance, sending its stock up 8% in pre-market trading. Taiwan Semiconductor is riding the wave of surging demand for AI chips, with sales up 36% year-on-year to $23.5 billion and net profit up 54%. AI-powered high-performance computing now accounts for 51% of revenue, reinforcing Taiwan Semiconductor’s role as the backbone of giants such as Nvidia, AMD, and Apple. If you’re looking for a leader in the AI race, Taiwan Semiconductor is the company to watch.
CEO CC Wei didn’t hold back during the earnings call, emphasizing that AI-related demand from customers is very strong and predicting that AI chips will account for mid-teens of this year’s revenue. . Fourth-quarter guidance is similarly bullish, with revenue expected to be between $26.1 billion and $26.9 billion, with the company expecting nearly 30% growth in 2024. Despite rising costs due to advanced technology nodes such as 3nm, Taiwan Semiconductor beat expectations on gross margin. 57.8%, proving it can handle heat while continuing to dominate the semiconductor industry.
Looking ahead, Taiwan Semiconductor plans to invest more than $30 billion in capital expenditures in 2024 to meet the continued demand for AI chips. Expansion in the United States is also on the horizon, with production scheduled to begin at the first Arizona factory in 2025. The company is strengthening its leadership position as AI reshapes the semiconductor industry, giving investors plenty of reason to remain bullish. The message is clear. Taiwan Semiconductor isn’t just keeping pace; it’s setting goals.
This article first appeared on GuruFocus.
