Needham & Firm analysts expressed confidence that Taiwan Semiconductor Manufacturing Co. is on observe to realize $110 billion in income in 2025.
Investing.com — The agency raised its worth goal for TSMC shares to $225, up from $210 in a be aware Friday, as they anticipate potential upside in gross margins.
A yr in the past, Needham rolled ahead its TSMC income estimates to 2025, with its preliminary might $110 billion determine considerably increased than the then-consensus estimate of $96 billion.
Following a sequence of “beat-and-raise” quarters from TSMC, the agency mentioned consensus has now aligned with this forecast, signaling sturdy market confidence within the semiconductor large’s development trajectory.
“We reiterate our view that $110 billion remains to be the proper income quantity for subsequent yr,” Needham acknowledged.
Wanting forward, TSMC’s income is anticipated to succeed in roughly $90 billion in 2024, positioning the corporate for a considerable 23% development in 2025.
“Now, with TSMC’s 2024 income probably reaching $90B, reaching $110B income in 2025, which represents 23% development, has grow to be an actual risk,” mentioned Needham. “The Road has additionally come to this view and the consensus estimate has moved to $110B, which is a significant step-up from the consensus of $96B a yr in the past.”
The analysts imagine that margins might additionally see vital enhancements, with gross margins probably rebounding to 60% within the second half of 2025.
The optimistic outlook stems from the absence of N2 manufacturing, which might dilute margins if launched prematurely.
Needham emphasizes that TSMC’s development in 2025 is prone to be pushed extra by quantity than by worth. As the corporate’s N5 capability development stabilizes and the N3 capability additions conclude, the analysts foresee a shift in focus from common promoting worth (ASP) will increase to increased wafer shipments.
For 2025, they challenge a 13% development in wafer shipments, whereas ASP could enhance by solely 10%, which displays a extra conservative strategy in comparison with prior years.
