TSMC Stock Jumps on AI-Fueled Earnings Surge

KEY TAKEAWAYS

• U.S.-listed Taiwan Semiconductor Manufacturing Co. shares jumped 9% Thursday after the chipmaker posted a quarterly earnings surge and projected a buoyant outlook on the back of the artificial intelligence (AI) boom.
• The company, which supplies tech heavyweights such as Apple and Nvidia, reported a better-than-expected 54% year-over-year rise in third-quarter net income of 325.3 billion New Taiwan dollars ($10.12 billion).
• TSMC also reported a 39% jump in revenue to NT$759.69 billion ($23.64 billion) and a 57.8% gross margin, beating analysts' estimates and its own guidance for both.

U.S.-listed Taiwan Semiconductor Manufacturing Co. (TSM) shares jumped 9% Thursday morning after the chipmaker posted robust quarterly earnings and projected a buoyant outlook on the back of the artificial intelligence (AI) boom.

The company, which supplies tech heavyweights such as Apple (AAPL) and Nvidia (NVDA), reported a 54% year-over-year rise in third-quarter net income of 325.26 billion New Taiwan dollars ($10.12 billion), up from NT$211 billion. The profit figure by the world's largest contract chip manufacturer beat the NT$300.78 billion consensus estimate of analysts polled by Visible Alpha. 

TSMC also reported a 39% jump in revenue to NT$759.69 billion ($23.64 billion) for the quarter and a 57.8% gross margin, above analysts' estimates and the guidance it gave for both in the second quarter.

"Our business in the third quarter was supported by strong smartphone and AI-related demand for our industry-leading 3nm and 5nm technologies," TSMC Chief Financial Officer (CFO) Wendell Huang said. "Moving into fourth quarter 2024, we expect our business to continue to be supported by strong demand for our leading-edge process technologies."

TSMC's Upbeat Outlook Lifts Chip Stocks Including Nvidia's

TSMC's upbeat earnings, in contrast to Dutch semiconductor-gear manufacturer ASML Holding's (ASML) downbeat outlook earlier in the week, restored investor faith in the AI boom Thursday. Shares of AI chip giants Nvidia (NVDA), Arm Holdings (ARM) and Advanced Micro Devices (AMD) all rose.

TSMC Chief Executive Officer (CEO) C.C. Wei called the demand for AI “real" in the earnings call, according to a transcript provided by AlphaSense.

TSMC American depositary receipts (ADRs) have almost doubled this year.

UPDATE—Oct. 17, 2024: This article has been updated to include a comment from the CEO and a refreshed share price.

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