Taiwan Semiconductor Manufacturing Co. (TSMC) is poised for further stock gains as it gears up to announce its upcoming results. Despite recently achieving a record high, the company is currently trading at modest valuations.
TSMC, known as the largest chip foundry globally, is anticipated to raise its annual revenue and capital expenditure estimates due to a stronger-than-expected sales performance in the latest quarter. This growth trend is seen as a testament to the ongoing expansion driven by artificial intelligence technologies.
Acknowledged as a significant player in the AI revolution, TSMC stands out as a key partner for manufacturing chips for tech giants like Nvidia Corp. and other industry leaders. Even amid uncertainties surrounding the future of smartphones and consumer goods, the continuous advancements in creating smaller circuitry remain a positive sign for the sector.
The market value of TSMC, the largest stock in Asia, has soared by $340 billion on the back of its shares quadrupling since October 2022. With a forward price-to-earnings ratio of less than 17, the company's valuation is now in close alignment with its five-year median, contrasting with the 15-year high valuation of over 28 times for the Philadelphia Semiconductor Index.
On Thursday, the Taiwanese chip giant is set to report its full first-quarter results, shedding light on the sales performance across its various divisions and the sustainability of its profitability amid global expansion efforts. Industry analysts expect TSMC's gross profit margin to hold steady at 53%, maintaining its strong financial position.
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