Taiwan Semiconductor Manufacturing (TSM) has exceeded first-quarter sales expectations, driven by the growing demand for artificial intelligence chips, resulting in a rise in TSM stock. The company reported a 16.5% year-over-year increase in sales for the March quarter, surpassing analyst estimates of 13.9% revenue growth. Total revenue for the quarter amounted to $18.86 billion, compared to $16.62 billion in the same period last year. This growth follows four consecutive quarters of declining sales for TSMC.
TSM Stock Rises After Strong Q1 Growth
TSM stock rose by 1.1% to reach $146.93 in midday trading. The company’s sales for March recorded a jump of 34.3% compared to the previous year, with a 7.5% increase from February. Analysts attribute the sales surge to robust demand for chips used in artificial intelligence and data center applications. This surge in demand continues to offset weaknesses in other market segments.
Industry Analysts Bullish on TSM Stock
Charles Shi, a Needham analyst, maintained a buy rating on TSM stock and raised the price target to $168 from $133. Shi emphasizes TSMC’s position as a strong player in the artificial intelligence market, describing it as one of the best “pick-and-shovel” companies supporting AI growth. While Shi anticipates some short-term production delays and wafer losses due to the recent earthquake in Taiwan, he still expects TSMC to meet its full-year growth target, making up for the temporary setbacks in the third quarter.
Similarly, Bernstein analyst Mark Li reaffirmed his outperform rating on TSM stock, pointing out that chip orders from Apple remain intact. Li believes that any weakness in Apple’s iPhone sales is mostly restricted to the Chinese market. Li’s price target for Taiwan Semiconductor’s U.S. shares stands at $150. TSM stock ranks first out of 33 stocks in IBD’s semiconductor manufacturing industry group, boasting a strong IBD Composite Rating of 89 out of 99.
Experts Optimistic Amid Short-Term Challenges
Despite the anticipated impact of the recent earthquake, industry analysts are optimistic about TSMC’s ability to maintain growth due to its strong position in supporting AI applications. While TSMC may face production delays and wafer losses in the near term, the company is expected to recover and meet its growth target.
Overall, Taiwan Semiconductor’s stronger-than-expected first-quarter sales, driven by the increasing demand for AI chips, has resulted in a positive market response. TSM stock continues to be a top performer in the semiconductor manufacturing industry, backed by its strong position in supplying chips to industry leaders such as AMD, Apple, and Nvidia.
