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What's in Store for Taiwan Semiconductors' (TSM) Q3 Earnings?

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Taiwan Semiconductor Manufacturing Company Ltd. (TSM - Free Report) is scheduled to report third-quarter 2021 results on Oct 14.

For third-quarter 2021, the company anticipates revenues between $14.6 billion and $14.9 billion.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $14.9 billion, suggesting growth of 22.7% from the year-ago quarter’s reported figure.

The consensus mark for third-quarter earnings is pegged at $1.03 per share, indicating an improvement of 14.4% from the prior-year reported figure. Additionally, the estimate has been unchanged over the past 30 days.

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 earnings surprise of 3.31%, on average.

Factors to Note

Taiwan Semiconductor’s strong efforts toward the innovation of technology products are likely to get reflected in the third-quarter results.

The solid demand for the company’s 7-nanometer (nm) technology is expected to have driven its performance in the to-be-reported quarter.

The strong momentum across advanced technologies, which are defined as 7nm and below, is likely to have benefited the company in the quarter under review.

The impacts of its deepening focus toward the full volume production of 5nm are likely to get reflected in the third-quarter results. The growing production of 6nm is expected to have contributed to the to-be-reported quarter’s performance.

Consequently, all these are likely to get reflected in the company’s third-quarter wafer revenues.

Taiwan Semiconductor is expected to have benefited from the uptick in chip design activity. The momentum in 5G smartphone launches is expected to have bolstered the company’s 5G smartphone penetration rate in the quarter under review. Further, it is likely to have gained strength from an uptick in high-performance computing (HPC)-related applications.

Additionally, strength across CPU, networking and AI accelerators are likely to get reflected in HPC revenues for the quarter to be reported.

The third-quarter results are likely to reflect the growing foundry industry and the increasing proliferation of IoT products.

However, the impacts of the ongoing pandemic might get reflected in the to-be-reported quarter’s results. Weak end-market demand and supply-chain disruptions, owing to the COVID-19 outbreak, are expected to have acted as headwinds in the third 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.

Texas Instruments Incorporated (TXN - Free Report) has an Earnings ESP of +9.22% and a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

HubSpot Inc. (HUBS - Free Report) has an Earnings ESP of +0.53% and a Zacks Rank of 3, currently.

Fortive Corporation (FTV - Free Report) has an Earnings ESP of +0.15% and a Zacks Rank of 3, currently.