3 Reasons to Buy TSMC Stock Beyond Record Q4 Net Profit

Core Viewpoint - TSMC's stock has surged due to strong quarterly results and long-term growth prospects driven by demand for AI chipsets and new technology advancements [1][2][6]. Group 1: Financial Performance - TSMC reported a record fourth-quarter net profit of $374.68 billion, a 57% increase year-over-year, primarily due to rising demand for AI chipsets [1]. - The company's first-quarter revenue guidance is between$ 25 billion and $25.8 billion, exceeding expectations by 6%, indicating strong near-term growth [2]. - TSMC's earnings per share are projected to increase by 21% from the previous year, with a Zacks Consensus Estimate of$ 9.12 [9]. Group 2: Growth Drivers - The demand for TSMC's custom AI chips from companies like Broadcom and Marvell Technology is expected to bolster future growth [3]. - The upcoming launch of TSMC's 2-nanometer chips is anticipated to drive further demand, with pre-order interest surpassing that for 3nm and 5nm chips [3]. - TSMC is well-positioned to capitalize on the semiconductor market's projected growth from $729 billion in 2022 to$ 1.47 trillion by 2030 [4]. Group 3: Strategic Initiatives - The new Stargate AI infrastructure program, backed by a $500 billion allocation, is expected to significantly benefit TSMC as its advanced chips are crucial for AI data centers [4]. - TSMC's net profit margin stands at 40.52%, slightly above the industry average of 40.51%, indicating efficient profit generation [5]. Group 4: Market Sentiment - Brokers have raised TSMC's average short-term price target by 7.5% to$ 235.13, with the highest target at $265, suggesting a potential upside of 21.2% [8].