Watch These TSMC Price Levels as the Chipmaker's Earnings Report Looms

As Taiwan Semiconductor Manufacturing Company (TSMC) prepares to release its fourth-quarter earnings report on Thursday, January 14, investors are eagerly anticipating the results of the world's largest contract chipmaker. With a significant portion of its revenue coming from advanced chips used in artificial intelligence (AI) applications, TSMC's stock price is expected to remain in the spotlight. In this article, we will explore the key factors influencing TSMC's stock price leading up to its earnings report and highlight the crucial price levels to watch.



AI-Driven Demand and Revenue Growth

TSMC's stock is expected to remain in the spotlight due to the surging demand for advanced chips used in AI applications. Analysts anticipate that this trend will fuel the company's earnings results, with a projected 58% leap in fourth-quarter profit. The world's largest contract chipmaker is expected to report a net profit of T$377.95 billion ($11.41 billion) for the quarter ended December 31, 2024, according to a LSEG SmartEstimate drawn from 22 analysts. This estimate compares to the 2023 fourth-quarter net profit of T$238.7 billion.

TSMC's revenue for the quarter is projected to be around T$868.42 billion ($26.36 billion), easily beating market forecasts. The company reported fourth-quarter revenue of T$868.5 billion New Taiwan dollars ($26.3 billion), according to CNBC calculations, up 38.8% year-on-year. For 2024, TSMC's revenue totaled 2.9 trillion New Taiwan Dollars, its highest annual sales since going public in 1994.



Capital Expenditure and Geopolitical Factors

Investors will closely scrutinize TSMC's outlook and capital expenditure (CapEx) plans as the company continues to invest billions in new factories. TSMC is spending billions of dollars on new factories overseas, including $65 billion on three plants in the U.S. state of Arizona. The company's capital expenditure was likely to be higher in 2025 than last year, though it did not provide a figure. On its last earnings call in October, TSMC predicted 2024 capital expenditure as being slightly higher than $30 billion.

Geopolitical factors, such as U.S.-China tensions, also play a significant role in TSMC's stock performance. The company's strategic importance in the global semiconductor industry makes it a target for geopolitical pressures. TSMC faces headwinds from U.S. government technology restrictions on China and uncertainty about President-elect Donald Trump's incoming administration, which has threatened broad import tariffs. The impact of tariffs to be imposed by the incoming Trump administration on demand remains to be seen.



Analyst Expectations and Price Targets

Analysts' expectations and price targets for TSMC's stock also influence its price leading up to the earnings report. Needham & Company, for instance, has a bullish outlook, projecting TSMC's revenue to reach $110 billion by 2025 and setting a price target of $225. The firm's confidence is rooted in anticipated improvements in gross margins, which they expect could rebound to around 60% in the latter half of 2025.

TSMC's stock chart shows an ascending triangle pattern, with a potential bullish price target of $246 if the stock breaks out to a fresh record high. Important support levels to track during dips include $190 and $175. Prior to the downtrend on Monday, $206 level could've provided a floor near the ascending triangle’s top trendline. However, a move lower could see the shares decline to around $190, a location on the chart where they may attract buying interest near a horizontal line that links the prominent July swing high with several peaks and troughs that formed from August to December. Finally, a decisive breakdown below that level opens the door for a drop to the $175 level.

In conclusion, TSMC's stock price is influenced by several key factors leading up to its earnings report, including AI-driven demand, revenue growth, capital expenditure, geopolitical factors, and analyst expectations. Investors should closely monitor the crucial price levels of $190 and $175, as well as the potential bullish price target of $246, to make informed decisions about the chipmaker's stock. As TSMC continues to grow and adapt to the dynamic semiconductor landscape, its ability to meet demand and deliver on ambitious targets will be crucial in solidifying its position as a leader in the industry.