Image: Taiwan Semiconductor’s shares have done well the past few years.
By Brian Nelson, CFA
Taiwan Semiconductor (TSM) recently announced first quarter earnings that came in better than expected. First quarter revenue increased 41.6% year-over-year, while net income and diluted earnings per share advanced 60.3% and 60.4%, respectively. Consolidated revenue was NT$839.25 billion ($25.53 billion), net income came in at NT$361.56 billion, while diluted earnings per share was NT$13.94 (US$2.12 per ADR unit). Gross margin for the first quarter was 58.8%, operating margin was 48.5%, and net profit margin was 43.1%. Management had the following to say about the quarter:
Our business in the first quarter was impacted by smartphone seasonality, partially offset by continued growth in AI-related demand. Moving into second quarter 2025, we expect our business to be supported by strong demand for our industry-leading 3nm and 5nm technologies. While we have not seen any changes in our customers’ behavior so far, uncertainties and risks from the potential impact from tariff policies exist. We will continue to closely monitor the potential impact on the end market demand, and manage our business prudently.
In the first quarter, TSMC’s shipments of 3-nanometer accounted for 22% of total wafer revenue, while 5-nanometer accounted for 36% of total wafer revenue and 7-nanometer accounted for 15%. Strength continued into April where the firm posted revenue growth of 48.1% on a year-over-year basis. Looking to the second quarter, revenue is expected to be between $28.4-$29.2 billion, representing a 38% increase at the midpoint, while its gross margin is targeted between 57%-59% and its operating profit margin is expected to be between 47%-49%. Looking to the full year 2025, revenue is expected to increase by close to mid-20s percent in U.S. dollar terms. The outlook for AI demand remains robust, and we continue to like shares of Taiwan Semiconductor in the ESG Newsletter portfolio.
—–
Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not a member? Subscribe today. The first 14 days are free.