TSM climbs above $113 on guidance update, earnings beat



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  • TSM stock climbs more than 7% on earnings beat.
  • 2024 revenue growth guidance given above 20%.
  • Management says AI demand will continue to aid 2024 growth.
  • AMD, Nvidia stocks jump to new highs on Taiwan Semiconductor guidance.

 

Taiwan Semiconductor (TSM), the global leader in computer chip fabrication, surged 9.8%  on Thursday after the firm beat Wall Street consensus for the fourth quarter and projected at least 20% revenue growth in 2024.

The NASDAQ Composite closed up 1.35% on the news as well, which is the first day all week that markets gained ground. Nvidia (NVDA) and Advanced Micro Devices (AMD) both popped to all-time highs on the sector news since they are associated with Taiwan Semi as major customers and will likely be part of this year's growth story in the semiconductor industry.

Taiwan Semiconductor earnings news

GAAP earnings for Taiwan Semiconductor reached $1.44 in the fourth quarter, beating consensus by 5 cents. Likewise, revenue of $19.62 billion overtook the consensus by $50 million but fell more than 1% from a year ago.

Management at Taiwan Semiconductor said that the revenue growth outlook in 2024 would grow between 20% and 25% in 2024, primarily due to larger orders for advanced chips used in AI workloads. 

Only a few firms design the advanced computer chips used in artificial intelligence (AI), and the two most prominent are the fabulous and fabless Nvidia and AMD. Both of them then contract with Taiwan Semi to produce their chips in its state-of-the-art fabs.

Taiwan Semiconductor CEO C.C. Wei said, “2023 was a challenging year for the global semiconductor industry, but we also witnessed the rising emergence of generative AI-related applications with TSMC as a key enabler.”

The company’s sector-leading 3-nanometer chip fabrication accounted for 15% of production, while 5-nanometer made up 35% of Q4 production. This segment will continue to grow in 2024, according to the CEO, which is why he thinks first-quarter revenue could reach $18.8 billion, above the consensus $18.2 billion.

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Taiwan Semiconductor stock forecast

Taiwan Semiconductor stock is now trading above $112, a price level shareholders haven't seen since late February of 2022. In other words, this is an 11-month high. TSM stock used the 13-week Simple Moving Average (SMA) as a jump-off point.

TSM stock is now in the demand zone that fortified price action for most of 2021. This area stretches from roughly $110 to $120. Above here is the augmented double top formation in the region just above $142. Other than the high $120s, there isn't much of a serious layer of resistance until that double top.

The Relative Strength Index (RSI) is not yet overbought, sitting as it is near 68. Some consolidation over the next few weeks could set this region up as a weigh station on TSM stock's next climb higher. But any break below the psychological $100 level will be viewed as a sign that it's time to sell.

TSM daily stock chart

 



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