$Taiwan Semiconductor Manufacturing(TSM)$ is scheduled to release its full Q1 2025 earnings results on 17 April 2025, before the market opens.
The consensus estimate for the revenues is expected to be between $25 billion and $25.8 billion. Zacks Consensus Estimate is pegged at $25.2 billion, indicating a rise of 33.6% from the year-ago quarter’s reported actuals.
Zacks Consensus Estimate for first-quarter earnings is pegged at $2.02 per share, implying a 46.4% increase from the year-ago quarter’s reported number.
Last week, TSM has released its Q1 revenue figures last week, TSM revenue reached NT$839.25 billion (approximately $25.5 - $25.6 billion USD). This represents a strong 42% increase year-over-year, the fastest growth rate since 2022.
This figure exceeded analyst expectations, which were generally around NT$830.5 billion ($25.2 - $25.3 billion USD).
Taiwan Semiconductor (TSM) Last Positive Earnings Call Saw Share Price Decline By 23.69%
TSM had its last positive earnings call on 16 Jan 2025 which saw its share price decline by 23.69%.
The earnings call highlighted strong growth in advanced technologies and high-performance computing, driven by robust AI demand and global expansion efforts. However, challenges remain with overseas fab costs and geopolitical risks. Despite these challenges, the overall outlook for 2025 is positive with significant growth expected.
Taiwan Semiconductor (TSM) Guidance
During the Q4 2024 earnings call, TSMC provided detailed guidance for Q1 2025, projecting a revenue range between USD 25 billion and USD 25.8 billion, which reflects a 5.5% sequential decline but a 34.7% year-over-year increase at the midpoint. Gross margin is expected to be between 57% and 59%, while the operating margin is projected to be between 46.5% and 48.5%. The effective tax rate for 2025 is anticipated to be between 16% and 17%. TSMC also outlined its 2025 capital expenditure plans, with a budget of USD 38 billion to USD 42 billion, predominantly allocated to advanced process technologies.
The company emphasized its focus on maintaining a long-term gross margin of 53% and higher, despite anticipated cost pressures from overseas expansion and inflationary impacts.
Taiwan Semiconductor Manufacturing has been growing earnings at an average annual rate of 19.6%, while the Semiconductor industry saw earnings growing at 7.5% annually. Revenues have been growing at an average rate of 17.9% per year. Taiwan Semiconductor Manufacturing's return on equity is 27.1%, and it has net margins of 40.5%.
Key Drivers for TSM Revenue Growth
Strong demand for AI servers and smartphones. Potential stockpiling by electronics manufacturers anticipating new US tariffs.
Here are what analyst is expecting for the full report on 17 April 2025.
Earnings Per Share (EPS): Analysts widely expect significant year-over-year growth. Consensus estimates hover around $2.02 to $2.05 per share, implying roughly a 46% to 52% increase compared to Q1 2024. (Note: One source mentioned $0.42, which seems inconsistent with the revenue surge and other estimates).
Revenue: Expectations were in the range of $25.0 billion to $25.8 billion. The preliminary release of ~$25.6 billion falls comfortably within this range and beat the consensus estimate of ~$25.2 billion.
What Could Drive A Positive Earnings And Concerns That Might Arise
As of 15 April, we have seen how Nvidia news that said it would take $5.5 billion in charges after the U.S. government said it would require licenses for exports to China of its H20 artificial intelligence chip, which has been one of its most popular chips.
Nvidia had dropped more than 6% in post-market at time of this writing.
Positive Drivers: Continued strength in AI chip demand ($NVIDIA(NVDA)$ , $Advanced Micro Devices(AMD)$ , $Alphabet(GOOGL)$), advanced packaging (CoWoS), and orders from key clients like Apple are seen as positives.
Fourth quarter revenue increased 14.3% sequentially, driven by demand for 3-nanometer and 5-nanometer technologies. Advanced technologies accounted for 74% of wafer revenue in Q4 and 69% for the full year, up from 58% in 2023.
HPC revenue increased 19% quarter-over-quarter, accounting for 53% of Q4 revenue. On a full-year basis, HPC increased 58% year-on-year.
Full-year revenue increased 30% in USD terms to $90 billion. Gross margin improved by 1.7 percentage points to 56.1%, and EPS increased by 39.9% to TWD 45.25.
TSM expected revenue growth of close to mid-20% in USD terms for 2025, driven by AI demand and a mild recovery in other segments.
Successful ramp-up of the Arizona fab with production in Q4 2024, and ongoing expansion plans in Japan and Europe. AI accelerator revenue accounted for mid-teens percent of 2024 total revenue, with expectations to double in 2025.
Concerns: Analysts express caution regarding the potential impact of US-China trade tensions and tariffs (even if semiconductors are currently exempt, broader economic slowdowns could affect demand). Some analysts (like JPMorgan and Citi) have recently lowered price targets, anticipating TSM might issue slightly more conservative full-year 2025 revenue growth guidance (perhaps in the 20-23% range, down from mid-20s) due to these uncertainties.
Potential risks from new U.S. restrictions on AI chip exports to China, though current analysis suggests the impact is manageable.
Overseas fabs, including in the U.S., are expected to contribute a 2% to 3% margin dilution annually over the next five years due to higher costs.
Quarter-over-quarter IoT revenue decreased by 15%, and DCE decreased by 6% in Q4.
Taiwan Semiconductor (TSM) Price Target
Based on 6 Wall Street analysts offering 12 month price targets for TSMC in the last 3 months. The average price target is $240.83 with a high forecast of $259.00 and a low forecast of $215.00. The average price target represents a 53.07% change from the last price of $157.33.
Taiwan Semiconductor Manufacturing has been growing earnings at an average annual rate of 19.6%, while the Semiconductor industry saw earnings growing at 7.5% annually. Revenues have been growing at an average rate of 17.9% per year. Taiwan Semiconductor Manufacturing's return on equity is 27.1%, and it has net margins of 40.5%.
So for investors, we might need to look at the long term while be cautious of the impact of its customer from the tariffs episode.
Technical Analysis - Exponential Moving Average (EMA)
If we looked at the technical, TSM bears are still in control, though we are seeing some improvement from the momentum as RSI is showing to move away from the oversold region.
Currently TSM is still below the key level and bears are still controlling the price movement especially with more details being released for the semiconductor tariffs.
We might see the bulls trying to attempt a daily uptrend, but it will not be easy, I will be looking to buy for long term, but will watch how the price movement is like for TSM’s customer.
Summary
While the full earnings report with profit figures and official guidance is due tomorrow, the preliminary revenue data was very strong and beat expectations, driven primarily by AI demand.
Here are some key things to watch in tomorrow's report will be the actual EPS figures, gross margins, and crucially, the company's updated forecast for the rest of 2025, especially in light of global economic conditions and trade policy uncertainties. The market reaction will likely depend heavily on this forward-looking guidance.
Appreciate if you could share your thoughts in the comment section whether you think TSM guidance would be modest considering the impact of tariffs on its customer.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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