On Tuesday, CNBC’s Jim Cramer called out the market reaction to Taiwan Semiconductor Manufacturing Co’s (NYSE:TSM) quarterly print. The sector, especially capital equipment companies, got a boost from the chipmaker’s report and guidance.
Taiwan Semiconductor reported fourth-quarter revenue of $26.88 billion, up by 39%, topping the analyst consensus of $26.28 billion.
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The gross margin was 59%, up 600 bps, backed by its 3-nm and 5-nm technologies.
The company expects first-quarter 2025 revenue of $25.0 billion—$25.8 billion, compared to the $24.97 billion consensus estimate. It has also earmarked $38 billion—$42 billion in fiscal 2025 capex versus the actual fiscal 2024 capex of $29.8 billion.
Taiwan Semiconductor shared plans to boost manufacturing capabilities, marking its focus on advanced process technologies.
Cramer correlated advanced process technologies with equipment catering to Nvidia Corp’s (NASDAQ:NVDA) GPUs and other accelerators. Taiwan Semiconductor’s plan to boost capex on equipment triggered a rally in its supplier stocks, including Applied Materials, Inc (NASDAQ:AMAT), Lam Research Corp (NASDAQ:LRCX), and KLA Corp (NASDAQ:KLAC), Cramer reasoned. However, the rally reflected investor conviction on the companies’ prospects.
Cramer also attributed the rally to investor expectations that the Trump administration would soften some of the Biden government’s advanced semiconductor technology embargo as the former took charge on Monday.
Taiwan Semiconductor won a $1.5 billion grant from the U.S. for its semiconductor facilities in Arizona, where the chipmaker has invested over $65 billion.
Trump verbally attacked Taiwan Semi during his presidential campaign for allegedly undermining America’s chip industry. He also criticized the U.S. CHIPS Act and promised to slap tariffs on Taiwanese chips.
Recently, Taiwan Semiconductor chief C.C. Wei dismissed concerns over U.S. AI sanctions, calling them “manageable.” He voiced the chipmaker’s focus on advanced packaging, citing that non-AI sectors like automotive and crypto mining remain unaffected by sanctions.
Bernstein analyst Rupal Agarwal reiterated an Outperform rating on Taiwan Semiconductor with a $258.00 price target, marking it as the firm’s 2025 top pick.
Taiwan Semiconductor stock surged over 93% in the last 12 months.
Price Action: TSM stock traded higher by 2.41% to $223.97 at the last check on Wednesday.
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