TSMC’s quarterly results were great, but the market also had some huge risk factors to weigh.
Semiconductor stocks were hit hard in Thursday’s trading, but Taiwan Semiconductor Manufacturing (TSM 0.39%) stock managed to end the day in the green. The chip company’s share price closed out the daily session up 0.4%, according to data from S&P Global Market Intelligence.
TSMC posted second-quarter results after the market closed yesterday, delivering sales and earnings for the period that beat Wall Street’s expectations. The company also issued strong guidance. The quarterly report was impressive enough to propel the stock to a small gain today despite geopolitical concerns spurring big sell-offs for many other semiconductor companies.
TSMC’s Q2 report was very strong
TSMC’s revenue surged 32.8% year over year in the second quarter to hit $20.82 billion and beat the average analyst estimate’s sales guidance by $730 million. Earnings per American depositary receipt came in at $1.48, topping Wall Street’s forecast for per-share earnings of $1.42. The company’s strong sales and earnings performance was aided by rising demand for artificial intelligence (AI) hardware and services, and it looks like the momentum is poised to continue.
For the third quarter, TSMC is guiding for sales to come in between $22.4 billion and $23.2 billion. At the midpoint of the guidance range, that would represent a 9.5% sequential quarterly sales increase and a 32% increase from its performance in Q3 last year.
Thanks to the strong quarterly results and guidance, TSMC stock climbed as much as 4.4% in Thursday’s trading. But geopolitical pressures caused the chip fabrication leader to give up most of its gains.
But chip investors are on edge despite the great results
Bloomberg reported yesterday that former president and current presidential candidate Donald Trump recently made comments suggesting that the U.S. could require Taiwan to pay money for defense services if he were to win the upcoming election and re-enter the office. Investors are worried that such a stance could make it more likely that China will invade Taiwan, which is currently the epicenter for advanced chip fabrication thanks to TSMC.
Adding another layer of complicating factors, Bloomberg also reported yesterday that President Biden’s administration was considering the implementation of new regulations that would make it more difficult for companies to export chips to China.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.