Taiwan Semiconductor Earnings Fuel a Rally in Chip Stocks
Taiwan Semiconductor stock is higher Thursday after the chip manufacturer beat expectations for its fourth quarter and issued a strong outlook. Here's what you need to know.


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.

Sign up for Kiplinger’s Free E-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
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.
-
Can the 'Guardrails Approach' Protect Your Retirement Investments?
This investing method helps retirees avoid running out of money, even in a highly volatile market.
By Simon Constable
-
Social Security Is Taxable, But There Are Workarounds
If you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
By Todd Talbot, CFP®, NSSA, CTS™
-
Social Security Is Taxable, But There Are Workarounds
If you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
By Todd Talbot, CFP®, NSSA, CTS™
-
Serious Medical Diagnosis? Four Financial Steps to Take
A serious medical diagnosis calls for updates of your financial, health care and estate plans as well as open conversations with those who'll fulfill your wishes.
By Thomas C. West, CLU®, ChFC®, AIF®
-
What Wall Street's CEOs Are Saying About Trump's Tariffs
We're in the thick of earnings season and corporate America has plenty to say about the Trump administration's trade policy.
By Karee Venema
-
To Stay on Track for Retirement, Consider Doing This
Writing down your retirement and income plan in an investment policy statement can help you resist letting a bear market upend your retirement.
By Matt Green, Investment Adviser Representative
-
How to Make Changing Interest Rates Work for Your Retirement
Higher (or lower) rates can be painful in some ways and helpful in others. The key is being prepared to take advantage of the situation.
By Phil Cooper
-
When to Sell Your Stock
Knowing when to sell a stock is a major decision investors must make. While there's no one correct answer, we look at some best practices here.
By Charles Lewis Sizemore, CFA
-
Within Five Years of Retirement? Five Things to Do Now
If you're retiring in the next five years, your to-do list should contain some financial planning and, according to current retirees, a few life goals, too.
By Evan T. Beach, CFP®, AWMA®
-
The Home Stretch: Seven Essential Steps for Pre-Retirees
The decade before retirement is the home stretch in the race to quit work — but there are crucial financial decisions to make before you reach the finish line.
By Mike Dullaghan, AIF®