Anticipated Surge: The Value of This AI-Related Semiconductor Company's Shares is Expected to Skyrocket Post-January 29th
In a striking turn of events, Taiwan Semiconductor Manufacturing Company (TSMC), infamously known as TSMC, thrived in the fourth quarter of 2024, setting the bar high with revenue soaring by 37% to an astonishing $26.9 billion. This exceptional performance didn't go unnoticed, as TSMC shares surged by nearly 4%, and the semiconductor industry followed suit, benefiting considerably.
TSMC's star-studded quarter not only topped Wall Street's expectations but also marked optimistic forecasts for the first quarter of 2025, promising a whopping 35% increase over previous years. TSMC, one of the industry's major players, holds a formidable 64% market share, with many prominent chipmakers and electronics companies relying on its fabrication plants for their semiconductor needs.
As a bellwether for the semiconductor industry, TSMC's success translated directly into positive ripples throughout the sector. No less impressive is TSMC's ambitious capital expenditure (capex) plans for 2025, which span $38 billion to $42 billion, marking a significant leap of 34% compared to 2024's figures.
Among the beneficiaries of TSMC's prolific spending is ASML Holding, a Dutch semiconductor giant and the leading manufacturer of lithography machines for chip fabrication. ASML, unfortunately, has encountered varied fortune on the stock market, bearing only slim 2% gains in contrast to the PHLX Semiconductor Sector index's 26% surge in the same period.
One main hurdle preventing ASML's growth has been the slow-paced spending on semiconductor manufacturing equipment, which ASML relies heavily on for its revenue. ASML's revenue guidance for 2024 remains stagnant at around 28 billion euros ($29 billion), but the picture becomes more optimistic in 2025, projecting between 30 billion and 35 billion euros ($31 billion to $36.2 billion), reaffirming the steady growth trajectory for the company.
TSMC's impressive financial performance holds undeniable implications for ASML, as the demand for advanced lithography systems – crucial for chip manufacturing, increasingly driven by booming sectors like AI – is surging. The addition of TSMC's leading market share to this mix plays a significant role in positioning ASML for robust growth in the foreseeable future.
TSMC projects a remarkable 40% annual increase in sales of AI accelerators over the subsequent five years, attesting to the significant revenue potential that lies ahead. With TSMC allocating an estimated 70% of its 2025 capex to advanced process nodes, which ASML excels in providing the technology for, the Dutch enterprise stands to reap substantial rewards.
As TSMC's revenue from AI accelerators tripled in 2024, its robust demand forecasts reveal a 100% growth in AI chip sales for 2025. TSMC's ambitious capex plans can be attributed to its eager clients' robust chip requirements.
The stage is set for ASML to outshine its competitors once more, particularly as it prepares to release its Q4 2024 earnings reports, and potential upgraded guidance for 2025. ASML's conservative revenue guidance of between 30 billion and 35 billion euros ($31 billion to $36.2 billion) in 2025 strengthens investor expectations as it surges past 2024's predicted earnings, offering an enticing 30x forward earnings multiple.
Investors may seize this opportunity by acquiring ASML stock, a tantalizing prospect given its lucrative growth potential and market strength.
Given TSMC's significant capital expenditure plans for 2025, which include allocating a large portion to advanced process nodes that ASML excels in providing technology for, investing in ASML stock could be an appealing choice for those seeking exposure to the thriving semiconductor finance sector.
With TSMC's expanding needs in semiconductor manufacturing equipment, ASML's potential revenue growth in 2025 is promising, making it an attractive investment considering its competitive position in the market and the lucrative forward earnings multiple.
