TSMC’s Second Quarter Results May Fuel New Rally as AI Demand Soars
Margin growth may trigger valuation expansion as foreign funds have been selling the stock in Taiwan for weeks.
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Bloomberg chart: TSCM
Taiwan Semiconductor Manufacturing Co.’s $420 billion equity rally this year will get a valuation test next week when it reports earnings, with analysts expecting the chipmaker to raise full-year sales forecasts.
The world’s biggest contract chipmaker will probably report a 29% increase in second-quarter net income on Thursday, according to the median estimate of analysts surveyed by Bloomberg. More importantly, analysts from JPMorgan Chase & Co. to Morgan Stanley expect it also to raise its full-year sales guidance, justifying another round of valuation expansion.
Like Nvidia Corp., TSMC has become a favorite artificial intelligence bet for investors with few other competitors able to duplicate its cutting-edge technology.
Analysts have been playing catchup in valuation and price targets, with the company surging to hit a $1 trillion market capitalization in the US earlier this week.
The sole supplier of Nvidia and Apple Inc.’s most advanced chips had previously guided for full-year revenue to grow by low-to-mid 20%. That’s increasingly seen as too cautious, especially after its sales beat for the June quarter and earnings reported by competitors such as Samsung Electronics Co. and major customer Broadcom Inc.
