Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) shares surged 4.71% in Thursday pre-market hours to hover around £119.92 ($158.81) per American Depositary Share as Q1 net profit and diluted earnings per share (EPS) increased by 60.3% and 60.4%, respectively. Trading volume during pre-market hours soared to 23.64 million shares versus a daily average of 18.50 million shares.
According to an earnings release dated 17th April, net profit was £8.39 billion ($11.12 billion) while diluted EPS was £1.60 ($2.12) per ADR unit. Total revenue for the quarter increased by over 35% year-over-year (YoY) but fell sequentially to £19.28 billion ($25.53 billion). For Q2, the semiconductor giant expects revenue of up to £22.05 billion ($29.2 billion).
TSMC CFO Wendell Huang said that while Q1 results were impacted by smartphone seasonality, the downside risks were partially offset by continued demand growth in the AI industry. Although the company hasn't witnessed any shift in client behaviour amid the new tariff policies, it is monitoring potential impacts on the end market demand, Huang added.
TSMC Could Benefit From Made-in-America Initiatives
The Trump Administration recently confirmed that imports from China will face tariffs up to 245%, citing Beijing's retaliatory actions in the escalating trade war. Furthermore, the US government's new export license rule to restrict Nvidia (NASDAQ:NVDA) chip sales to China has mounted further downward pressure on the AI giant and its suppliers, including TSMC, which fell 3.6% yesterday on the news.
The US stock market benchmark indexes, including the S&P 500, Nasdaq Composite, and Dow Jones, were down between 3% and 1.73% on Wednesday.
However, TSMC could benefit from tailwinds emerging from a ramp in US chip production after Nvidia confirmed earlier this week its commitment to invest £376 billion ($500 billion) over this decade in the US, with support from suppliers, including TSMC. Nvidia said that the production of Blackwell chips has started at TSMC's new chip production plants in Phoenix, Arizona.
Elsewhere, Advanced Micro Devices (NASDAQ:AMD) said this week that its key processor chips would soon be manufactured and validated at TSMC's Arizona facility as part of its commitment to ramp production within the US. AMD also confirmed that its EPYC processor is to be taped out and based on TSMC's 2nm process technology, scheduled for launch in 2026.
'TSMC is expanding very quickly,' said Simon Wang, director of infrastructure and communication services at TSMC. 'We are expanding our global manufacturing footprint and have new fabrication plants being built in Taiwan, Japan, Germany, and the US. That means we are going to require a lot of computing power for fab production, research and development simulation, and business operation.'
This week, Daiwa Securities upgraded the TSMC stock to 'buy' to align with the broader analysts consensus despite risks of tariffs and a volatile macroeconomic backdrop. Daiwa analyst Rick Hsu said that the stock-rating upgrade reflects a belief that the market has overly priced in a pessimistic scenario, which isn't supported by the chipmakers business performance.
Analyst consensus had a 'buy' rating on TSM with an average 12-month target price of £181.95 ($240.93) per share, implying an upside of 58.9% from its current trading levels.
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