Taiwan Semiconductor Q1 Earnings Preview: Earthquake Impact, New Plants, 'Pick-And-Shovel' Play For AI Puts Stock In Spotlight

Leading semiconductor company Taiwan Semiconductor Manufacturing Co. Ltd. TSM is set to report first-quarter financial results before the market opens Thursday, April 18.

Here are the key earnings estimates, what analysts are saying and key items for investors to watch.

Earnings Estimates: Analysts expect Taiwan Semiconductor to report first-quarter revenue of $18.395 billion, according to data from Benzinga Pro.

The company reported revenue of $16.719 billion in last year's first quarter. The company has beaten revenue estimates from analysts in seven of the past 10 quarters, according to data from Benzinga Pro.

Guidance from the company previously called for first-quarter revenue to come in a range of $18 billion to $18.8 billion.

Analysts expect the company to report earnings per share of $1.32 for the first quarter, beating last year's $1.31 reported in the first quarter. The company has beaten analysts' estimates for earnings per share in 10 straight quarters.

What Analysts Are Saying: A leading analyst recently called Taiwan Semiconductor one of the "best pick-and-shovel stories."

Needham analyst Charles Shi has a Buy rating and raised the price target from $133 to $168 on Taiwan Semiconductor recently.

The analyst sees a potential short-term impact on the semiconductor company due to an earthquake in Taiwan in April that led to chip production being suspended.

Shi said the missed sales could be recovered in the third quarter for the company, saying full-year estimates for the company remain in place.

Delayed shipments from the company could impact the short-term, but don't hurt overall demand, the analyst said.

Here are other analyst ratings and price targets for Taiwan Semiconductor in April:

Barclays: Overweight rating, raised price target from $125 to $145

Susquehanna: Positive rating, raised price target from $160 to $180

Related Link: Taiwan Bolsters ‘Chip Diplomacy’ With Canada And France Amid China Tensions

Key Items to Watch: The earthquake and potential missed production mentioned by the Needham analyst remains one of the biggest items to watch in the first-quarter results.

The company could share the financial impact and update guidance on if the sales will be made up later in the year.

Taiwan Semiconductor was recently awarded $6.6 billion from the U.S. Commerce Department as part of the CHIPS Act. The money will be used towards a plant to be built in Arizona, with an expected operational date of 2030.

The company also announced a plant to be built in Germany in August 2023. An update on the timeline of these new highly anticipated plants could be an item for investors to watch.

Overall the other big item to watch is commentary on demand as Taiwan Semiconductor is a key supplier for Apple Inc AAPL and NVIDIA Corp NVDA, two of the largest companies worldwide.

The company previously said that first-quarter results could be impacted by smartphone seasonality. With the commentary and as a supplier of products for Apple, the first quarter results could lead to interpretation of smartphone sales.

TSM Price Action: Shares of Taiwan Semiconductor are down 0.57% to $139.02 on Wednesday at publication versus a 52-week trading range of $81.21 to $158.40. Shares of Taiwan Semiconductor are up 57% over the last year.

Read Next: One Of Best Traders In Congress Bought And Sold Taiwan Semiconductor Stock Ahead Of CHIPS Act Deal — Here’s How Much They Made

Photo: Courtesy Taiwan Semiconductor