U.S.-listed Taiwan Semiconductor Manufacturing Co. (TSM.US) ADRs are currently gaining 7% after the company reported record third-quarter net profit, driven by strong demand for smartphones and artificial intelligence chips. The world's largest chipmaker reported that quarterly net profit rose 54% year-on-year to 325.26 billion Taiwan dollars, equivalent to $10.10 billion. That topped analysts' consensus estimate of 298.00 billion Taiwan dollars. At the same time, TSMC's revenue was also a record, rising 39% to $759.69 billion Taiwan dollars for the quarter. After such strong results, the company decided to raise its earnings forecasts for the fourth quarter of this year and thus for the full year.

FOURTH QUARTER FORECAST

  • Sales of $26.1 billion to $26.9 billion, $24.94 billion was expected
  • Gross margin of 57% to 59%, expected 54.7%
  • Operating margin 46.5% to 48.5%, expected 44.3%

THIRD QUARTER RESULTS

  • Net income 325.3 billion Taiwan dollars, +54% y/y, expected 299.3 billion Taiwan dollars
  • Gross margin 57.8% vs. 53.2% q/q, 54.8% expected
  • Operating profit 360.77 billion Taiwan dollars, +58% y/y, 330.82 billion Taiwan dollars expected
  • Operating margin 47.5% vs. 42.5% q/q, expected 44.6%
  • Sales 759.69 billion Taiwan dollars, +39% y/y, 751.06 billion Taiwan dollars expected

OTHER IMPORTANT COMMENTS

  • Sales in 2024 to grow nearly 30% in USD terms
  • Company continues to see “extremely strong” demand related to artificial intelligence

In response to such strong results, the stock traded at new highs before Wall Street opened. Moreover, Nvidia (NVDA.US) shares are also up nearly 3%. Source: xStation