TSMC Anticipates 5% Profit Increase in Q1 Driven by Strong AI Chip Demand

TSM Stock

Taiwan Semiconductor Manufacturing Co (NYSE:TSM), the leading producer of advanced chips for artificial intelligence applications, is poised to announce a 5% growth in first-quarter profit on Thursday, buoyed by robust demand. With clients like Apple and Nvidia, TSMC has thrived amid a surge in AI adoption, offsetting the slowdown in pandemic-induced electronics demand and propelling its stock to new heights.

Analysts project TSMC to report a net profit of T$217.2 billion ($6.71 billion) for the quarter ending March 31, according to LSEG SmartEstimate, which gives precedence to forecasts from consistently accurate analysts. This marks an increase from the T$206.9 billion net profit reported in the same period last year.

In a noteworthy development, TSMC recently announced a 16.5% uptick in first-quarter revenue, surpassing market expectations and aligning with the upper range of the company’s guidance. Eric Yao, a vice president at Eastspring Investments in Taiwan, highlighted the significance of the $6.6 billion U.S. subsidies for TSMC’s Arizona plants, underscoring the company’s prospects in maintaining its edge in advanced process technologies.

“TSMC will likely continue to lead in that front, and Intel and Samsung will not have much chance to catch up,” Yao stated, referencing competitors striving to challenge TSMC’s dominance.

Intel recently disclosed deepening operating losses in its foundry business, signaling challenges in regaining its technology lead lost to TSMC in recent years. Meanwhile, TSMC announced plans to construct a third fab in Arizona, further solidifying its position in the market.

Analysts at Fubon Securities anticipate TSMC to revise its outlook for AI demand upward, suggesting that the high-teens revenue target from AI could be achieved earlier than the previously projected 2026, possibly in 2025.

The AI surge has propelled TSMC’s Taipei-listed stock to a historic high, with a remarkable 36% surge this year, outperforming the broader market’s 14% gain.

TSMC is scheduled to host an earnings call at 0600 GMT on Thursday, providing further insights into its performance and prospects.

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