TSMC Stock Surges on Strong Q4 Results, Bullish AI Outlook

Taiwan Semiconductor Manufacturing Company (TSMC) shares surged in premarket trading on Thursday, following the release of better-than-expected fourth-quarter results and a bullish outlook for artificial intelligence (AI) demand. The world's largest contract chipmaker reported net income of NT$374.68 billion ($11.37 billion), a 57% year-over-year increase, and revenue of NT$868.46 billion ($26.36 billion), up 38.8% from the same period last year.



TSMC's strong performance was driven by robust demand for its industry-leading 3-nanometer and 5-nanometer technologies, particularly from customers in the AI and high-performance computing sectors. The company's revenue from AI accelerators accounted for "close to a mid-teens percentage" of its total revenue in 2024, representing a threefold increase from the previous year. Looking ahead, TSMC expects this revenue to double in 2025, as the AI boom continues to fuel demand for advanced chips.



In addition to its strong fourth-quarter results, TSMC provided an upbeat outlook for the first quarter of 2025, with revenue expected to be between $25.0 billion and $25.8 billion. The company also projected a gross profit margin of between 57% and 59% and an operating profit margin of between 46.5% and 48.5% for the quarter.

TSMC's bullish outlook for AI demand is supported by the company's strategic expansion to meet this growing need. The company is scaling up its advanced processes, specialty technologies, and advanced packaging capabilities to support the AI market. TSMC expects its revenue from AI accelerators to achieve a compound annual growth rate (CAGR) of over 40% over the next five years, starting in 2024, fueled by the AI boom and TSMC's technological advantages.



TSMC's Chairman and CEO, C.C. Wei, reiterated the strength of AI demand and the company's strategic expansion to meet this need in his speech. He noted that TSMC's revenue from AI accelerators is expected to achieve a CAGR of over 40% over the next five years, starting in 2024. Additionally, TSMC anticipates a 20% CAGR for its overall revenue over the next five years, starting in 2024, underlining the company's strong growth momentum.

In conclusion, TSMC's better-than-expected fourth-quarter results and bullish outlook for AI demand have driven the company's stock to new highs. With its technological leadership and strategic expansion in the AI market, TSMC is well-positioned to continue its strong growth trajectory in the years ahead. Investors should closely monitor TSMC's progress as it capitalizes on the growing demand for advanced chips in the AI and high-performance computing sectors.