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What's in Store for Taiwan Semiconductors' (TSM) Q2 Earnings?

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Taiwan Semiconductor Manufacturing Company (TSM - Free Report) is scheduled to report second-quarter 2021 results on Jul 15.

For second-quarter 2021, Taiwan Semi anticipates revenues between $12.9 billion and $13.2 billion.

The Zacks Consensus Estimate for second-quarter revenues is pegged at $12.96 billion, suggesting growth of 24.8% from the year-ago quarter’s reported quarter.

Further, the consensus mark for second-quarter earnings is pegged at 89 cents per share, indicating an improvement of 14.1% from the prior-year reported figure.

The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters, and missed the same once. It has a trailing four-quarter positive earnings surprise of 3.9%, on average.

Factors to Note

Taiwan Semiconductor is expected to have benefited from the solid momentum in 5G smartphone launches in the second quarter. Moreover, strengthening semiconductor demand, owing to the growing deployment of 5G,is expected tohave continued benefiting the company.

Additionally, acceleration in chip design activity is likely to have continued aiding its performance in the quarter under review.

Further, its strong efforts toward the innovation of technology products are likely to have contributed well to its second-quarter performance. Moreover, it is expected to have driven revenues growth inhigh performance computing (HPC) applications.

Further, the company’s deepening focus toward the full volume production of 5-nanometer (nm) is expectedto get reflected in the to-be-reported quarter’s results. Also, rising demand for 5nm across smartphone and HPC applications is expected to have beena tailwind.

Furthermore, progression in the development of 3nm, which is gaining solid momentum among customers, is likely to get reflected in the to-be-reported quarterly results.

Additionally, increasing demand for the company’s 7nm technology is expected to have driven its performance in the quarter under review.

Along with this, the strong momentum across advanced technologies, which are defined as 16nm and more, is anticipatedto have benefited the company inthe quarter under review.

Consequently, all these factors are likely to have driven wafer revenue growth of Taiwan Semiconductor in the soon-to-be-reported quarter.

Additionally, the company is likely to have gained from the growing proliferation of gaming, wearables, drones and VR/AR devices. Moreover, the growing adoption of cloud services fueled by the coronavirus-induced work-and learn-from-home necessity, which has boosted the demand for data-center chips might have remained another positive.

Also, second-quarter results are likely to reflect benefits from the growing foundry industry and the increasing proliferation of IoT products.

However, headwinds related to the pandemic are anticipated to get reflected in the to-be-reported quarter’s results. The global shortage of semiconductor capacity due to supply-chain disruptions is expected to have affected the company in the second quarter.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for Taiwan Semiconductor this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Taiwan Semiconductor has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their soon-to-be-reported quarterly results.

TE Connectivity Ltd. (TEL - Free Report) has an Earnings ESP of +1.82% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Texas Instruments Incorporated (TXN - Free Report) has an Earnings ESP of +1.6% and a Zacks Rank of 2, currently.

Kla Corporation (KLAC - Free Report) has an Earnings ESP of +2.71% and a Zacks Rank of 3, currently.