TSM stock price: TSMC shares jump as Q4 revenue and profit beat on strong AI demand and advanced chip sales

Shares of Taiwan Semiconductor Manufacturing Co. (TSMC) are up in premarket trading Thursday after the company announced its Q4 2024 earnings results. As of the time of this writing, TSMC shares (NYSE: TSM) have jumped over 5% in premarket trading to around $217.64—close to the company’s all-time high stock price of just over $222 per share. Here’s what you need to know.

TSMC’s Q4 beat on revenue and profit

Announcing fourth-quarter results for its 2024 fiscal year, which ended on December 31, TSMC reported the following:

TSMC says that year-over-year Q4 revenue increased 38.8% while its EPS increased 57%. To put its numbers into further context, TSMC beat analysts’ estimates on both revenue and income. As CNBC notes , analysts had been expecting revenue of NT$850.08 (about $25.8 billion USD) and net income of NT$366.61 billion (about $11.1 billion USD) for the quarter.

When compared to TSMC’s Q3, the company saw a 15.2% increase in net income and a 14.3% increase in revenue in Q4. The company says its gross margin was 59% for Q4, and its net profit margin was 43.1%.

Why did TSMC have such a good quarter?

You can mainly thank artificial intelligence and its most advanced chipsets for the company’s positive Q4.

“Our business in the fourth quarter was supported by strong demand for our industry-leading 3nm and 5nm technologies,” TSMC’s chief financial officer, Wendell Huang, said in a statement.

The “nm” in the “3nm and 5nm technologies” Huang referenced stands for “nanometers,” which is the measurement used to measure the size of transistors on a chip. The smaller the nanometer measurement, the more transistors can fit onto a chip, making the chips more powerful and enabling them to run increasingly complex processes—like the kind needed for AI tasks.

TSMC’s 3nm chips are currently its most advanced chips shipping to its customers, which include technology powerhouses Apple and Nvidia. TSMC, for example, makes the A18 chipset found in Apple’s latest iPhone 16 lineup. The 3nm chip is the most powerful chip ever in a smartphone.

TSMC’s chips also help power AI servers across the world—and chips that are powerful enough to run AI servers are in high demand, helping propel TSMC’s stellar Q4 results. As a matter of fact, the demand for its AI-capable chips is expected to help offset slowing seasonal demand for its smartphone chips next quarter.