TSMC (TSM) Crushes Q1 Estimates — So Why Is the Stock Falling?

TLDR

• TSMC’s U.S.-listed stock (TSM) fell 3.1% in overnight trade after hitting record highs pre-earnings
• Q1 revenue rose 8% to NT$1.134 trillion, with gross margin of 66.2%, beating guidance of 63–65%
• EPS of NT$22.08 came in 7% above analyst estimates
• TSMC warned of potential long-term supply disruptions in helium and bromine from Middle East conflict
• Needham raised its price target on TSM to $480 from $410, maintaining a Buy rating

Taiwan Semiconductor Manufacturing (TSM) dropped 3.1% in U.S. trade Thursday and another 2.4% in Taipei on Friday, as investors locked in gains after a strong run-up heading into earnings.

Taiwan Semiconductor Manufacturing Company Limited, TSM

The stock had hit a record high of T$2,101.46 in Taipei earlier this week before pulling back.

TSMC reported record Q1 profit, with revenue climbing 8% quarter-over-quarter to NT$1.134 trillion. Gross margin landed at 66.2%, above the company’s own guidance range of 63–65%.

Earnings per share came in at NT$22.08, beating analyst estimates by 7%.

For Q2, management projected an 11% quarter-over-quarter revenue increase. That’s well above the typical seasonal growth of around 6% and ahead of analyst expectations of 7–8%.

The company credited continued strong demand from the AI sector, particularly for advanced chips used in data centers.

Supply Chain Warning

Despite the strong numbers, TSMC flagged a potential risk: supply disruptions in specialty materials, specifically helium and bromine, tied to the ongoing U.S.-Israel conflict with Iran.

The war has disrupted material flows from the Middle East to Asia, and attacks on regional facilities have caused some production stoppages.

TSMC said it has secured alternate chemical sources for the near term, but the longer-term picture remains uncertain.

Capacity Questions

Analysts on the earnings call pressed CEO C.C. Wei on whether capacity constraints could push customers toward rival chipmakers.

Wei pushed back, saying it would take a minimum of three years and heavy capital investment to build independent chipmaking infrastructure at TSMC’s scale.

Reports earlier this year suggested Nvidia may face delays on its next-generation Vera Rubin AI chips due to TSMC capacity limits.

TSMC said it plans to increase capital spending over the coming quarters to meet rising demand.

On the valuation side, Needham raised its price target on TSM to $480 from $410 following the results, keeping a Buy rating.

GuruFocus pegs TSMC’s intrinsic value at $261.00, putting the stock roughly 39% above that level at its current price of $363.35.

The company’s P/E ratio sits at 34x, compared to a five-year median of 22.55x.

Insider activity over the past three months showed $819,595 in purchases with no recorded sales.

The post TSMC (TSM) Crushes Q1 Estimates — So Why Is the Stock Falling? appeared first on CoinCentral.