Taiwan Semiconductor Manufacturing Company (NYSE: TSM), the world’s largest contract chipmaker, continues to make waves in the semiconductor industry with its remarkable performance in the third quarter of 2024.
The company reported a year-over-year profit surge of 54%, further cementing its leadership in the global market. Currently trading at $201.4, with a 6% gain over the last five days, TSMC’s robust earnings and strategic partnerships are fueling its rise.
Given these developments, investors are left wondering how much further TSMC stock can rise by the end of the year.
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TSMC’s impressive Q3 performance
In Q3 2024, TSMC reported revenue of $23.5 billion, surpassing expectations of $23.31 billion and exceeding analyst predictions.
This strong performance was primarily driven by high demand for its 3-nanometer and 5-nanometer chip technologies, which power smartphones, high-performance computing, and AI applications.
Notably, advanced chip technologies (7nm and smaller) accounted for 69% of the company’s wafer revenue, further showcasing TSMC’s technological edge.
“Our business in the third quarter was supported by strong smartphone and AI-related demand for our industry-leading 3nm and 5nm technologies.Looking ahead to the fourth quarter of 2024, we expect our business to continue benefiting from strong demand for our leading-edge process technologies.”
– Wendell Huang, Senior VP and Chief Financial Officer ,TSMC
Expansion and strategic investments
TSMC’s expansion into new markets is set to further boost its long-term growth. For example, in 2024, the company opened its first factory in Japan and is investing $65 billion in three new facilities in Arizona.
These strategic investments are expected to enhance TSMC’s global manufacturing capabilities and help meet the surging demand for AI chips, particularly in the U.S. and Japan.
Additionally, in Europe, work on a new factory in Dresden, Germany, began earlier in 2024. Furthermore, reports revealed that TSMC plans to significantly expand the number of production sites on the continent, further solidifying its global presence.
This expansion is indeed driven by the skyrocketing demand for semiconductors, fueled by the ongoing AI boom. This rising demand is reflected in the $5.4 trillion increase in the market value of major AI companies from late 2022 to the summer of 2024.
Geopolitical risks loom large
However, despite TSMC’s impressive financials, growing geopolitical tensions around Taiwan pose a significant risk to the company. China’s recent ‘Joint Sword-2024B‘ military drills around Taiwan have heightened fears of potential conflict, which could severely disrupt TSMC’s production and export operations.
As the largest microchip supplier globally, any disruption could lead to a critical shortage of chips, affecting not only TSMC’s stock performance but also the broader tech industry.
Analyst forecast and financial outlook
Analysts remain optimistic about TSMC’s future prospects. They maintain a consensus “Strong Buy” rating with an average price target of $211.25, representing a 4.57% increase from the current price.
Notably, some analysts have set even higher price targets, with Susquehanna forecasting up to $250, reflecting an upside potential of 23.73%.
Financial forecasts are equally optimistic. For instance, TSMC’s revenue for 2024 is expected to grow by 32.71% to $2.87 trillion, while earnings per share (EPS) are projected to rise by 31.89%.
Looking further ahead, revenue growth for 2025 is anticipated to increase by 23.54% to $3.54 trillion, reinforcing TSMC’s potential to capitalize on the surge in AI-driven demand.
AI prediction for TSMC stock price
In light of these projections, Finbold consulted OpenAI’s advanced AI tool, ChatGPT-4, to predict TSMC’s future stock performance.
Based on TSMC’s impressive Q3 results, strong AI-driven demand, and ongoing expansion plans, the AI predicts that TSMC’s stock could rise to $220 by the end of 2024.
However, while this target is optimistic, the ongoing geopolitical tensions surrounding Taiwan could serve as a limiting factor.
Nevertheless, TSMC’s strong fundamentals and AI-driven growth suggest that $220 is achievable by year-end, provided external risks remain manageable.
