Taiwan Semiconductor Manufacturing (TSM) is sparking a rally in chip stocks Thursday after the semiconductor manufacturer beat top- and bottom-line expectations for its fourth quarter and issued a strong outlook for its first-quarter results.
At last check, TSM shares were up nearly 5%, while fellow semiconductor stocks Lam Research (LRCX) and KLA Corp (KLAC) were roughly 7% higher.
In the quarter ending December 31, the Taiwan-based chip manufacturer, whose clients include Magnificent 7 stocks Nvidia (NVDA) and Apple (AAPL), said revenue increased 37% year over year to $26.9 billion. Its earnings per share (EPS) rose 55.6% from the year-ago period to $2.24.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Our business in the fourth quarter was supported by strong demand for our industry-leading 3 nanometer and 5 nanometer technologies," said Taiwan Semiconductor Chief Financial Officer Wendell Huang in a statement.
Huang added that in the first quarter, "we expect our business to be impacted by smartphone seasonality, partially offset by continued growth in AI-related demand."
Is Taiwan Semiconductor stock a buy, sell or hold?
Taiwan Semiconductor has put in an impressive performance on the price charts over the past 12 months, up 114% on a total return basis (price change plus dividends) vs the S&P 500's 26% gain. And Wall Street thinks the tech stock has more room to run.
According to S&P Global Market Intelligence, the average analyst target price for TSM stock is $236.14, representing implied upside of nearly 9% to current levels. Additionally, the consensus recommendation is a Strong Buy.
Financial services firm Needham is one of those firms with a Buy rating on TSM stock and has a $225 price target.
"We expect Taiwan Semiconductor Manufacturing's foundry business to strengthen as we do not foresee a competitive challenge for the next several years," says Needham analyst Charles Shi. "As Moore's Law [an observation that suggests the number of transistors in an integrated circuit doubles every two years] slows, we expect TSMC will need to spend aggressively in research and development and invest in capacity."
The analyst adds that he expects Taiwan Semiconductor will need to expand its operations outside of Taiwan " as the world enters a new era of superpower competition."
Related content
-
Are COVID Shots Still Covered By Medicare?Getting the new COVID-19 vaccine covered by Medicare isn't as easy this year as it was in the past. Here's what you need to know before you take a trip to your pharmacy.
-
How Digital Platforms Are Changing the Way You Invest in GoldInvesting in gold is easier than ever thanks to digital platforms. Learn how online tools are lowering costs, increasing transparency and making gold accessible to all investors.
-
How Digital Platforms Are Changing the Way You Invest in Gold
Investing in gold is easier than ever thanks to digital platforms. Learn how online tools are lowering costs, increasing transparency and making gold accessible to all investors.
-
Stocks Rise to Start Fed Week: Stock Market TodayThe Nasdaq Composite and S&P 500 hit new record closing highs as Wall Street awaits the Fed's next rate cut.
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary FormsStandard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
This Is How Life Insurance Can Fund Your Dreams NowBeyond a death benefit, life insurance can provide significant financial value and flexibility through 'living benefits' while you are still alive, helping with expenses like education, business ventures or retirement.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on RetirementWhile some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
-
One Small Step for Your Money, One Giant Leap for RetirementSaving enough for retirement can sound as daunting as walking on the moon. But what would your future look like if you took one small step toward it this year?
-
This Is What You Really Need to Know About Medicare, From a Financial ExpertHealth care costs are a significant retirement expense, and Medicare offers essential but complex coverage that requires careful planning. Here's how to navigate Medicare's various parts, enrollment periods and income-based costs.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
