A Close Look at Taiwan Semi’s Q3 2024 Earnings and Guidance

Following our flurry of trades today, let’s delve deeper into the September-quarter earnings report and guidance from Taiwan Semiconductor TSM, which, in our view, was very supportive for several of our holdings.

TSM’s September Quarter

Because we collect and dissect TSM’s monthly revenue reports, we expected the September quarter to be a strong one — and it sure was. Overall revenue climbed 36% year over year, but like many things the devil was in the details, and those details are more than supportive for our holdings in Nvidia NVDA, Marvell MRVL, Apple AAPL, Qualcomm QCOM and Universal Display OLED.

High Performance Computing, which houses AI and data center, posted a 65% year-over-year jump in September-quarter revenue, equating to a 10.7% sequential increase.

Yesterday we discussed the smartphone rebound given Q3 2024 data from IDC, and TSM's September-quarter smartphone revenue, up 18.6% year over year and 16.3% sequentially, offers further confirmation.

TSM's Internet of Things (IoT) revenue rose 5.8%, year over year, and more than 30% quarter over quarter. That along with double-digit gains at TSM’s Auto business bodes well for the IoT and Auto sectors for Qualcomm when it reports.

We continue to have One ratings for QCOM and OLED, and we will have some work to do on our NVDA price target, especially given TSM’s December-quarter outlook.

TSM’s December-Quarter Guidance and Semi-Cap Comments

As strong as TSM’s September quarter was, the company sees further gains ahead. its revenue guidance of $26.1 billion-$26.9 billion for the December quarter implies 11%-14.5% sequential growth and 33%-37% year over year. This sets the tone for strong guidance when our holdings report over the next few weeks, but we’ll continue to track TSM’s monthly revenue reports to gauge the validity of that revenue forecast.

Earlier today, we picked up more shares of Applied Materials AMAT following the as-expected comment from TSM about its semi-cap spending for this year. Following the trade, TSM’s CFO Wendell Huang added further support for that trade decision when he said:

"For TSMC, a higher level of capital expenditures is always going to be related with higher growth opportunities in the coming years… And as long as our growth outlook remains strong, we will continue to invest. So it is very likely that our capex next year will be higher than this year."

As we noted in the AMAT trade, the next data point to watch for Applied Materials will be quarterly results from Samsung. When we pair those figures, we will also be mindful of what Intel INTC has to say when it reports, but as we’ve been pointing out Intel is a rather small customer for Applied compared to ASML Holding ASML.

Over the last few years, Nvidia, Marvell, and more recently Qualcomm and others have been eating Intel’s lunch. That has germinated into many of Intel’s current issues and those share losses explain why it’s dialing back its capital spending plans. Even so, TSM’s strong revenue means its capacity utilization levels are rising, driving the need for more equipment even as it taps CHIPs Act programs in the U.S. and related ones in the eurozone.

More Pro Portfolio:

At the time of publication, TheStreet Pro Portfolio was long NVDA, MRVL, QCOM, AAPL, OLED and AMAT.