Shares in Taiwan Semiconductor Manufacturing (TSM 1.26%) were up almost 4% by midday Wednesday. The move follows the company's excellent fourth-quarter earnings released last Tuesday. As is often the case, the company's positive outlook led to Wall Street analyst upgrades.
Management's outlook called for full-year 2024 revenue to increase by a low to mid-20% range in U.S. dollar terms as the industry experiences a cyclical bounce driven by artificial intelligence (AI) demand.
Industry bodies and peers confirm a recovery is on the way
The company is the leading semiconductor foundry, so what it says matters, but it helps to see its outlook backed up elsewhere. For example, the Semiconductor Industry Association expects the global semiconductor market to grow by a double-digit percentage in 2024.
In addition, today's earnings report from semiconductor equipment company ASML helped fuel the bullish fire. ASML CEO Peter Wennink noted that, while 2024 revenue is set to equate to that of 2023, "We also expect 2024 to be an important year to prepare for significant growth that we expect for 2025."
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That outlook matches Taiwan Semiconductor's capital spending plans for $28 billion to $32 billion in 2024 (the midpoint of which is similar to the 2023 figure). Still, the company's capital spending is still relatively high, as it's ramped up spending to support future growth.
ASML's outlook implies a year of sales recovery in the semiconductor industry in 2024, leading to increased capacity utilization and, ultimately, a boost in capital spending in 2025 as semiconductor companies increase spending to build more capacity. That's a bullish outlook for the industry and its leading player, Taiwan Semiconductor.
