TSMC Stock Soars Due to Strong July Sales

Taiwan Semiconductor Manufacturing Company (TSMC) experienced a notable increase in its sales for July, resulting in a stock price rise of over 4% on Friday. The company’s shares listed in the U.S. also saw gains at the market’s opening.

Analysts reported that TSMC’s revenue for July reached NT$256.953 billion, reflecting a 24% month-over-month growth compared to June’s revenue of NT$207.869 billion.

This strong performance positions TSMC favorably ahead of typical quarterly trends, meeting approximately 35% of both analysts’ and consensus estimates for the third quarter, which are NT$741.223 billion and NT$746.279 billion, respectively.

Key factors contributing to this positive performance include robust demand for AI servers, as well as a rebound in standard server demand. Furthermore, TSMC is benefiting from a significant ramp-up in Apple’s supply of iPhones for the second half of the year, along with Intel’s revised forecasts for its Lunar Lake processors.

Despite this encouraging early performance, analysts caution against making broad assumptions about the entire quarter’s results. They highlight a historical trend where TSMC usually reports stronger-than-expected outcomes early in the quarter but reverts to results that align more closely with its initial guidance by the end of the quarter.

Exchange rates have also influenced TSMC’s performance, with a favorable shift observed in July, although the Taiwanese dollar remains slightly weaker compared to when TSMC provided its Q3 guidance. Generally, a weaker currency benefits TSMC’s revenues and gross margins.

Given the strong start to the quarter, along with a positive outlook for TSMC’s future prospects, analysts maintain an Outperform rating on the stock with a target price of NT$1,175, supported by the company’s long-term growth potential in sectors like 5G, high-performance computing, and automotive industries.