Annabelle Chih
Taiwan Semiconductors (New York Stock Exchange:TSM) most recent earnings report received good reviews from several Wall Street firms.
The company’s third quarter results exceeded expectations and its outlook for the next quarter exceeded expectations.
stocks rose 4% Thursday.
Bank of America, which has a purchase stock rating, boosted its earnings estimates for Taiwan Semiconductor (SST). The global foundry, which competes with companies like Samsung (OTCPK:SSNLF), Global Foundries (SGF) and to some extent Intel (INTC), is a technology leader and has new advantages thanks to emerging artificial intelligence in end devices or bringing ai to smartphones and PCs.
The firm added that the valuation of 13.5 times estimated 2024 earnings, compared to a historical range of 10 to 26 times earnings, makes it an attractive entry.
Third-quarter earnings per share were 8% above the bank’s expectations, driven by stronger gross margin thanks to a favorable foreign exchange rate and higher utilization rates. Fourth-quarter revenue guidance also beat expectations as its 3-nanometer technology advances.
“Management appears optimistic about recovery in 2024 as inventory digestion nears end, rush orders increase and PC/smartphone demand stabilizes,” analysts led by Brad Lin wrote in a note. The company sees no change in actions and limited competitive threats.
Taiwan Semiconductor (TSM) sees the strength of ai in the cloud, helped in part by Nvidia (NVDA), and is on track to expand its chip-on-wafer-on-substrate platform for the capability of high-performance computing applications in 100% year after year. year starting at the end of next year.
The company also dismissed the latest US restrictions on Chinese exports aimed at further curbing the use of ai, saying it sees limited impact in the near term.
Susquehanna’s Mehdi Hosseini and Kenneth Wu, who have a Positive rating on the stock, said Taiwan Semiconductor (TSM) “remains one of the best quality undervalued names in our coverage universe.”
Taiwan Semiconductor also updated its capital expenditure plan for the year, reducing it to $32 billion, from a previous forecast of $32 billion to $36 billion.
“In our opinion, TSM is seeing a bottom in the general semi-cycle, although there remains a lack of visibility on the recovery rate. However, TSM is expected to continue benefiting from the arrival of new products from customers (in the first half of 2024),” Susquehanna said.
