Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) sales in the fourth quarter exceeded expectations, and the AI boom is expected to continue until 2025.

The sales performance of chip manufacturing giant Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) exceeded expectations in the fourth quarter of 2024, enhancing investors' hopes that the hot momentum of spending on artificial intelligence hardware will continue into 2025. Data released by Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR shows that the company's revenue grew by 39% from October to December, reaching 868.5 billion New Taiwan Dollars (approximately 26.3 billion US dollars). This exceeds the average expectation of 854.7 billion New Taiwan Dollars. The strong performance of the largest company in Taiwan has strengthened expectations that large tech companies like Alphabet and Microsoft Corporation will continue to rapidly build and upgrade data centers to drive the development of artificial intelligence. This month, AI server manufacturer Foxconn Precision Industry Co., Ltd. reported sales that exceeded expectations, while Microsoft Corporation outlined plans to invest $80 billion in data centers this fiscal year. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR saw accelerated growth in December, with a revenue growth ceiling of 34% for 2024. In comparison, the official target for Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR was an annual growth of 30%, although this expectation was in U.S. dollars. This global largest advanced chip manufacturer is one of the biggest beneficiaries in the global artificial intelligence development race. The market value of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR nearly doubled in 2024, currently valued at close to 1.1 trillion US dollars in the United States. However, some investors are concerned about when the artificial intelligence boom will gradually fade. Although Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's revenue exceeded expectations, it only outperformed the average prediction by 1.6%, falling below the optimistic expectations of most analysts. More pessimistic market observers point out potential bottlenecks in development such as overbuilding, power shortages, and continuing lack of killer artificial intelligence applications or services, all of which could deplete all server capacity. Investors are looking to Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR to provide insight into the industry's outlook when it releases its full earnings report on January 16. In addition to NVIDIA Corporation and the AI field, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR must also address increasing technological market competition and political uncertainty from GEO Group Inc in 2025. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR still relies on business from Apple Inc., as the company is the main producer of iPhone chips. This American company is striving to spark demand for its flagship product in 2025, even though many users expect gradual increases in AI functionality to drive the next iteration of the device. Analyst Charles Shum stated, "The company's gross margin could rise to its highest level in two years, at 58% or even higher. At the upcoming earnings conference call, there are four aspects worth noting: first, the CoWoS advanced packaging capacity construction and revenue prospects, which may provide insight into the expected strength of demand for AI chips in the next 12-18 months. Second, progress on capacity upgrades at the Arizona factory in the United States, essential for meeting onshore chip manufacturing demands from companies like Apple Inc. and NVIDIA Corporation. Third, weakening demand for 7nm, 16nm, and larger mature nodes could put pressure on profits. Lastly, the 2025 capital expenditure plan will indicate Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's confidence in its next-generation N2 node." The United States has also implemented a series of restrictions to prevent NVIDIA Corporation's most powerful chips from flowing to other countries, the long-term impact of which remains uncertain for Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's major clients. Morgan Stanley forecasts the annual sales growth rate of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR to reach around 20%. Analyst Charlie Chan wrote, "Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR typically gives conservative guidance at the beginning of the year but then exceeds expectations." The company raised its 2024 revenue forecast.With long expectations at the beginning of the new year, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR may once again take a more conservative stance.In the long term, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR is seeking rapid international expansion. The company expects that by 2025, capital expenditures will increase from approximately 30 billion US dollars last year. According to a local official, the company plans to establish more factories in Europe, with a focus on the artificial intelligence chip market. In addition, the company is also in the process of construction in Japan, Arizona, and Germany.