From Nasdaq: 2024-04-18 16:59:00

Artificial intelligence (AI) is reshaping industries with its demand for specialized chips. Meta Platforms (META) unveiled a new AI accelerator chip to boost efficiency and reduce reliance on Nvidia (NVDA). Taiwan Semiconductor ADR (TSM) is confirmed as the producer of Meta’s advanced chips using its 5nm process, offering triple the performance.

In its latest earnings release, TSM expects strong demand for its 3nm and 5nm technologies. With a market cap of $721.1 billion, TSM dominates the foundry market with a 61% share. The stock has surged 27% YTD, outperforming the S&P 500. TSM pays dividends and aims to return 70% of free cash flow as dividends.

TSM trades at a forward earnings multiple of 23.18x, cheaper than Intel (INTC) at 58.7x. The company reported Q1 earnings of $1.38 per share, beating estimates with revenue growth of 16.5% driven by AI chip demand. Q1 saw significant shipments of 3nm, 5nm, and 7nm chips, with advanced technologies making up 65% of wafer revenue.

Analysts forecast TSM’s fiscal 2024 earnings to reach $6.15 per share, increasing by 18.7% YoY. The consensus rating for TSM is a “Strong Buy,” with an average price target of $149.67 indicating a potential upside of 13.2%. The highest price target of $180 suggests a potential rally of 36.2% over the longer term.



Read more at Nasdaq: 1 Semiconductor Stock Set to Benefit from Meta’s New AI Chip