TSMC Q4 Preview: Focus On CoWoS And Gross Margin Guidance (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Taiwan Semiconductor Manufacturing Company Limited aka TSMC continues to gain market share as it beats competition such as Samsung, displacing it among its customers.
• TSMC's CoWoS capacity expansion is expected to double again in 2025; commentary on plant progress would be a key focus point in Q4 FY24's earnings call.
• The next couple of quarters may see further gross margin guidance beats, driven by 15-20% pricing increases in CoWoS due to fully booked-out demand.
• Valuations are attractive, as TSM stock is trading at a 15.3% discount vs. peers (vs. 69% premium in Sep. '24). Technicals are also bullish as it has cleared a monthly resistance area.
• The main risk is that recently going into the Q4 FY24 earnings release this week, Wall Street has upgraded estimates in revenues, EBIT, and EPS; elevating the chances of some bullish themes being already priced in the stock, and limiting incremental upside potential.

Read the full article here.