Taiwan Semiconductor Q4 Earnings Preview: Geopolitical Waves, Intel's Challenge, Valuation Signals

Taiwan Semiconductor Manufacturing Co Ltd TSM aka TSMC, will be reporting its fourth-quarter earnings on Jan. 18. Wall Street expects the company to report $1.36 in EPS and $19.15 billion in revenues as it reports before market hours.

Taiwan-based TSMC is the world’s second most valuable semiconductor company and the world’s largest dedicated pure-play independent semiconductor foundry. With a market cap of $485 billion, the company is a key supplier to Apple Inc AAPL, Nvidia Inc NVDA and Advanced Micro Devices AMD.

Here's what analysts will be focusing on in the Q4 earnings report, and how TSMC stock currently maps against Wall Street estimates.

The Investment Thesis

The investment thesis for TSMC stock revolves around key factors, including Q4 results, geopolitical tensions, financial performance, and competitive dynamics with Intel.

Also Read: Taiwan Semiconductor Q4 Sales Beats Estimates As AI Demand Offsets Chip Shortage: Report

The Geopolitics

Geopolitical tensions, notably Taiwan’s distinct identity from China under President William Lai Ching-te, pose risks to TSMC’s operations and investor sentiment. A stronger Taiwanese independence stance may impact trade relations, especially with China being a significant semiconductor market. Conversely, bolstered ties with the U.S. could positively influence TSMC’s stock.

TSMC Vs. Intel

The competitive landscape for TSMC has intensified as Intel Corp INTC aims to regain its leadership. While Intel’s improved execution does challenge TSMC’s process leadership, the risks haven’t significantly damaged TSMC’s long-term uptrend bias.

TSM Stock Valuation

Despite strong profitability, slower growth and rising liabilities have affected its valuation, presenting an undervalued opportunity. The stock trades at a forward P/E of 19.63, relative to a sector median of 23.74.

TSMC’s current valuation may not entirely reflect its leadership in the market, suggesting a possible investment opportunity. Investors might consider monitoring the stock for buying opportunities during periods of market weakness.

TSMC Analyst Consensus and Ratings

Q4 Analysts' Focus: TSMC’s fourth-quarter results could be pivotal, with analysts evaluating its technological edge compared to competitor Intel.

Ratings & Consensus Estimates: Consensus ratings from 13 analysts who rated the stock in the past 90 days, have a Strong Buy recommendation on TSM stock with a price target of $121.48, implying a 19.48% upside.

Price Action: TSM stock closed 0.42% higher at $101.67 on Tuesday.

Read Next: Here’s How Much $100 Invested In Taiwan Semiconductor 5 Years Ago Would Be Worth Today

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