Taiwan Semiconductor Manufacturing (TSM -1.22%) Announced the 4th quarter of the 2024 fiscal year in 2024 on January 16, and the results of a major semiconductor giant gained insight into the semiconductor industry.
This company, which is widely known as TSMC, is a semiconductor foundry that manufactures chips for fabeless chip manufacturers without unique manufacturers such as NVIDIA. (NVDA -3.12%)With home appliances company. TSMC provided services to 522 customers last year, manufacturing about 12,000 products in multiple categories such as smartphones, personal computers (PCs), data centers, automobile applications, and Internet (IoT). I have pointed out.
The sales in the quarter of the previous year were $ 26.9 billion, up 37% year -on -year, and the management gave a great guidance to grow sales in the first quarter of 2025 to $ 25.4 billion (at the middle point). 。 TSMC expects sales in 2025 to increase in the middle of 2025 throughout the year.
All of them suggest that the demand for chips manufactured by the company will continue to be strong, which is also encouraging for Nvidia shareholders.
The result of TSMC indicates NVIDIA’s good time
NVIDIA is one of the top three TSMC customers, and the company, which is a pioneer in artificial intelligence (AI), has a potential deceleration of spending on AI infrastructure, intensifying competition, and recently the US government has chips for foreign countries. We face various issues such as restrictions imposed on sales. countries. However, TSMC’s outlook is a bullish signal that NVIDIA could reach a strong year of 2025.
After all, TSMC expects the sales of AI chips to doubled to 2025 due to the “Surse of AI -related demand”. This explains why the company’s capital expenditure (capital investment) is 38 billion to $ 42 billion, far exceeding last year’s $ 29.8 billion. Management pointed out that about 70 % of capital investment in 2025 would be used to manufacture advanced chips.
These advanced chips are based on the process node of 7 nanometers (NM) or less. TSMC has produced 74 % of the fourth quarter of chip revenue from the sales of these advanced technologies, increasing from 67 % in the same period of the previous year. Specifically, this is surprising because 60% of the company’s revenue is based on 3nm and 5nm chips, and these process nodes are used to manufacture AI graphics processing units (GPU) such as NVIDIA. Not.
TSMC’s decision to make a large amount of investment in these advanced process nodes clearly shows that demand for AI chips continues to be healthy. This also means that NVIDIA should be able to manufacture more AI GPUs in 2025, thanks to TSMC’s higher capital investment. In addition, NVIDIA is said to have been allocated 60 % of TSMC’s advanced chip packaging ability this year.
In all of these, NVIDIA has been on track that supports more orders in the latest Blackwell chips, and has confirmed that demand has already exceeded supply. As a result, Nvidia is likely to exceed the expectation of Wall Street this year. Perhaps this was the reason for the revenue forecast of NVIDIA’s 2026 fiscal year (starting late this month) after the drop in the announcement of the export regulation proposal.
YCharts data.
Wall Street seems to have regained confidence in NVIDIA’s ability to support the continuous growth in 2025. TSMC also stated at the latest financial results that potential export regulations should be “managed.”
Still attractive valuation
Despite the rise of 171 % last year, investors can still get NVIDIA shares with reasonable valuation (2026 fiscal year profit forecasts). Analysts anticipate Nbidia’s profits of next year to increase $ 4.45 per share, but the company may exceed the numbers based on the bright outlook and capital investment of TSMC.
According to Yahoo!, NVIDIA has set a stock price award (PEG ratio) by 0.99 based on the next five years of profit growth forecast. finance. If the PEG ratio is less than 1, it usually shows that it is underestimated compared to the growth of the revenue that the shares can be realized. Combining the strong outlook for major foundation partners, NVIDIA will continue to be an attractive buy -in stock in 2025.
Hersche Chohan has no position to any of the brands mentioned. Motley Fool’s Day has a position in the production of NVIDIA and Taiwanese -deductive electricity and recommend them. Motley Fool’s Day has a disclosure policy.
