TSMC's Q4 Profit Set to Surge 58% on Strong AI Chip Demand

Taiwan Semiconductor Manufacturing Company (TSMC), the world's leading contract chipmaker, is expected to report a significant jump in its fourth-quarter profit, driven by robust demand for artificial intelligence (AI) chips. According to a LSEG SmartEstimate drawn from 22 analysts, TSMC's net profit for the quarter ended Dec. 31 is projected to reach T$377.95 billion ($11.41 billion), up 58% from the same period last year. This strong performance is expected to continue into 2025, with analysts forecasting a 25.4% increase in revenue for the full year.

TSMC's growth is largely driven by its AI customers, such as Nvidia and Apple, which are investing heavily in advanced chips for AI applications. Brett Simpson, co-founder and senior analyst at Arete Research, expects 2025 to be another year of significant growth for TSMC, driven by AI customers. TSMC's investment in new factories overseas, including a $65 billion project in Arizona, is also expected to boost its growth prospects.

However, 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. Edward Chen, chairman of Fubon Financial's securities investment unit, notes that the impact of tariffs on demand remains to be seen, and progress on the Arizona fab and its yield rates will be crucial for the company.

TSMC is expected to update its outlook for the current quarter and the full year, including planned capital expenditure, during its earnings call on Jan. 16. In October, TSMC said capital expenditure was likely to be higher in 2025 than last year, though it did not provide a figure. For 2024, TSMC predicted capital expenditure of slightly more than $30 billion.

TSMC's stock has soared 81% in 2024, significantly outperforming the broader market, which gained 28.5%. The company's strong performance is reflected in its high analyst ratings, with 4 out of 4 analysts rating the stock as a "Strong Buy." The average price target for TSMC stock is $228.75, with a low estimate of $200 and a high estimate of $250. This suggests that analysts expect the stock to continue to rise in the coming months.



In conclusion, TSMC's strong fourth-quarter profit is expected to be driven by robust demand for AI chips, with analysts forecasting a 58% increase in net profit. The company's growth prospects remain positive, despite headwinds from U.S. government restrictions and uncertainty about President-elect Trump's incoming administration. TSMC is expected to update its outlook for the current quarter and the full year during its earnings call on Jan. 16. With a strong performance in 2024 and high analyst ratings, TSMC's stock is expected to continue to rise in the coming months.