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Taiwan Semiconductor Manufacturing (TSM) on Thursday beat estimates for the first quarter thanks to strong demand for AI chips. TSM stock rose on the news.
The world’s leading contract chip manufacturer, better known as TSMC, earned $2.12 per U.S. share on sales of $25.53 billion in the March quarter. Analysts polled by FactSet had expected TSMC to earn $2.07 a share on sales of $25.46 billion. On a year-over-year basis, TSMC earnings rose 58% while sales increased 39%.
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For the current quarter, TSMC expects revenue of $28.4 billion to $29.2 billion. The midpoint of $28.8 billion topped Wall Street’s target of $26.92 billion. In the first quarter last year, it posted sales of $20.66 billion.
“Our business in the first quarter was impacted by smartphone seasonality, partially offset by continued growth in AI-related demand,” Chief Financial Officer Wendell Huang said in a news release.
“Moving into second quarter 2025, we expect our business to be supported by strong demand for our industry-leading 3-nanometer and 5-nanometer technologies,” he said. Circuit widths on chips are measured in nanometers, which are one-billionth of a meter.
In the first quarter, shipments of 3-nanometer chips accounted for 22% of TSMC’s total wafer revenue and 5-nanometer chips accounted for 36%. Advanced technologies, defined as 7-nanometer and smaller nodes, accounted for 73% of total wafer revenue.
TSM Stock Rises After Q1 Report
On the stock market today, TSM stock climbed a fraction to close at 151.74.
TSMC produces chips for AMD (AMD), Apple (AAPL), Broadcom (AVGO), Qualcomm (QCOM), Nvidia (NVDA) and more.
TSMC maintained its full-year outlook, but its strong Q2 guidance implied a conservative stance for the rest of the year, Barclays analysts said in a client note. Taiwan Semiconductor faces uncertainty related to tariffs and the macroeconomic picture. Barclays rates TSM stock as overweight, or buy, with a price target of 255.
TSMC’s outlook “appears somewhat foggy beyond the next 90 days,” Needham analyst Charles Shi said in a client note. He rates TSM stock as buy with a price target of 225.
TSM stock ranks second out of 31 stocks in IBD’s semiconductor manufacturing industry group, according to IBD Stock Checkup. Taiwan Semiconductor has a middling IBD Composite Rating of 65 out of 99.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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