To The Moon

$Taiwan Semiconductor Manufacturing(TSM)$ is scheduled to report its second-quarter results on 18 July (Thursday).

Market is expecting TSM to earn $1.41 per U.S. share on sales of $20.14 billion in the June quarter. In the three months ended June 30, TSMC generated the equivalent of $20.83 billion in sales.

TSMC's monthly sales rose 32.9% in local currency from June 2023. Production of chips for artificial intelligence applications boosted TSMC's sales in the period.

Positive Gains And TSM Has Beaten EPS Estimates For Last 3 Quarters

If we were to look at TSM past performance, it has beaten the EPS forecast for the last 3 quarters on the back of the AI demand, and the AI demand for chips remain to continue for another few quarters.

Now that the AI have moved towards consumer inference where demand for load would be mobile, there will be more demand for the TSM 3nm order for Q4 flagship smartphone chips.

Queue for TSMC’s 3nm Process Capacity Extended to 2026.

If you have been following the development of the smartphone chip, there are currently two companies which are building the new wave of 5G flagship smartphone chip.

MediaTek and Qualcomm actual competition will begin in the fourth quarter. With MediaTek launching the “Dimensity 9400” to directly compete with Qualcomm’s “Snapdragon 8 Gen 4.”

What would be important to note is both these two major manufacturers are using TSMC’s 3nm process to produce their new chips, which have recently entered the production phase. On top of these two major manufacturers, $NVIDIA Corp(NVDA)$ , $Advanced Micro Devices(AMD)$ , and Apple are also actively seeking TSMC’s 3nm capacity.

That has helped TSMC to secure another order and seeing a surge in its advanced process business. It has been reported that the queue for TSMC’s 3nm process capacity has extended all the way to 2026.

To ensure the smooth launch of the Dimensity 9400, MediaTek has already started production at TSMC to secure sufficient supply capacity. The 3nm process is currently the most advanced node technology. Previously, TSMC mentioned that its 3nm process capacity will triple this year, but it still remains in short supply.

Taiwan Semiconductor Manufacturing (TSM) >80% Gains YTD

Another reason which we need to look closely is TSM has given investors more than 80% gains year-to-date. This is boosted by the AI demand, and TSMC makes cutting-edge chips for AMD (AMD), Apple (AAPL), Broadcom (AVGO), Nvidia (NVDA), Qualcomm (QCOM) and others.

It is the top manufacturer of chips for AI applications in data centers as well as PCs and smartphones. Just like Nvidia, TSMC has become a favourite artificial intelligence (AI) bet for investors with few other competitors able to duplicate its cutting-edge technology.

Analyst Stock Price For Taiwan Semiconductor Manufacturing (TSM)

Based on 11 Wall Street analysts offering 12 month price targets for Taiwan Semiconductor Manufacturing in the last 3 months. The average price target is $184.30 with a high forecast of $250.00 and a low forecast of $150.00.

The average price target represents a -1.63% change from the last price of $187.35. If we looked at how TSM has performed before and after its earnings, normally there will be a slight decline in its stock price, the reason might be investors are taking profits first, then buy in at a much lower price.

I will share more in the next section.

Taiwan Semiconductor Manufacturing (TSM) Technical (MACD and KDJ)

As mentioned in previous section, I have tried to analyse the chart for TSM stock price movement before the previous quarterly earning, it looks like TSM experience a dip before the earnings, despite with guidance being positive, then it began to rise nicely after hitting a new low.

if we look at the MACD, it is actually show a downward trend and KDJ is in a decline movement. But when we looked at the current MACD movement, there might be signs of TSM making a slight downside, and KDJ is trying to consolidate, hence, I would think today (15 July) trading would be crucial to see if TSM is giving sign of moving downside due to profit taking ahead of earnings.

Or are we going to see TSM forming another rally? Another important thing to note is the overall semiconductor performance especially looking at $Philadelphia Semiconductor Index(SOX)$ whether this index is rallying?

Summary

For TSM, there have been positive news reporting on the expected guidance and also its order for their new 3 nm flagship chips, but are these enough to gather enough sentiment and confidence from traders and investors to make a rally for TSM.

From the last week movement, I am not seeing that, so I would be monitoring the price action closely today (15 July) to see if there is a signal and confirmation of a nice gap up post earnings for TSM.

Appreciate if you could share your thoughts in the comment section whether you think TSM would be building a rally leading up to its earnings release?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.