AI Chip Boom Drives Q1 Sales Beat For Taiwan Semiconductor Manufacturing

AI Chip Boom Drives Q1 Sales Beat For Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing (TSM) on Wednesday topped expectations for first-quarter sales thanks to booming demand for artificial intelligence chips. TSM stock rose on the news.




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The world’s largest chip foundry, better known as TSMC, said its March-quarter sales rose 16.5% year over year in local currency. Analysts had been looking for a 13.9% increase in revenue.

TSMC generated the equivalent of $18.86 billion in March-quarter sales, vs. estimates for $18.26 billion. In the year-earlier period, its sales totaled $16.62 billion.

TSMC’s Q1 revenue growth follows four straight quarters of declining sales.

Taiwan Semiconductor’s customers include AMD (AMD), Apple (AAPL) and Nvidia (NVDA), to name just a few.

TSM Stock Rises After Report

On the stock market today, TSM stock climbed 0.6% to close at 146.22.

TSMC said its sales for the month of March jumped 34.3% year over year and increased 7.5% from February.

Strong sales of chips for AI and data center applications helped to offset weakness in other areas, analysts said.

‘AI Pick-And-Shovel Story’

Needham analyst Charles Shi reiterated his buy rating on TSM stock and upped his price target to 168 from 133.

“We believe TSMC is one of the best AI pick-and-shovel stories,” Shi said in a client note.

However, he trimmed his estimates for TSMC’s second quarter to reflect the impact of the April 3 earthquake in Taiwan.

“While TSMC has reaffirmed its full-year outlook of low- to mid-20s revenue growth, we believe the company might be seeing some short-term production delays and wafer losses, which could hurt June-quarter sales,” Shi said. “We expect TSMC to make up most of the lost sales in Q3 and meet its full-year growth target.”

TSM Stock Ranks First In Group

Bernstein analyst Mark Li maintained his outperform rating on TSM stock after the chipmaker’s report. He has a price target of 150 on Taiwan Semiconductor’s U.S. shares.

Li noted that Apple’s iPhone chip orders at TSMC appear intact. Sales weakness for the iPhone is likely limited to China, he said.

TSM stock ranks first out of 33 stocks in IBD’s semiconductor manufacturing industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 89 out of 99.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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