Why did TSM's 2024 EPS consistently exceed forecasts?

TSM's 2024 EPS consistently exceeded forecasts due to several key factors:

1. Revenue Growth: TSM's fourth quarter revenue increased by 14.3% sequentially, which is a significant indicator of the company's financial performance. This growth can be attributed to the company's ability to capitalize on the increasing demand for semiconductor devices, especially in the AI and automotive sectors.
2. Operating Efficiency: The company's gross margin fell from 56.3% to 53.1%, and the operating margin dipped similarly, from 45.5% to 42%. Despite these declines, TSMC continued to see more of its revenue coming from AI-related products. This shift in product mix likely contributed to the higher EPS, as AI-related products may have higher profit margins than traditional semiconductor products.
3. Market Demand: The AI chip market is expected to grow significantly, driven by the increasing demand for AI technologies in various applications. TSM's position as a leading manufacturer of integrated circuits and other semiconductor devices positions it well to capitalize on this growth. The company's ability to meet the demand for AI chips likely contributed to its strong financial performance.
4. Institutional Confidence: Institutional investors showed confidence in TSM, with several hedge funds and other institutional investors increasing their holdings in the company. For example, Roundview Capital LLC increased its position in TSM by 2.8% during the fourth quarter. This confidence may have reflected the company's strong fundamentals and growth prospects.

In conclusion, TSM's 2024 EPS consistently exceeded forecasts due to revenue growth, operating efficiency, market demand, and institutional confidence. These factors combined to drive the company's financial performance and exceeded market expectations.