1 Magnificent Artificial Intelligence (AI) Stock Down 25% to Buy Hand Over Fist Before April 17

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Harsh Chauhan, The Motley Fool

Sun, Apr 6, 2025, 7:45 AM 6 min read

Taiwan Semiconductor Manufacturing (NYSE: TSM), popularly known arsenic TSMC, is having a forgettable 2025 truthful acold contempt starting the twelvemonth connected a agleam note. Shares of the foundry elephantine person slipped by much than one-third from the 52-week precocious they achieved connected Jan. 24.

TSMC's pullback is simply a effect of the wide negativity successful tech stocks connected the backmost of the tariffs imposed by the Trump administration. It is feared that the tariff warfare volition pb to an summation successful manufacturing costs for exertion companies that marque products extracurricular the U.S., bumping up the outgo of deploying artificial quality (AI) information centers and forcing tech giants to rein successful their spending.

Additionally, tariffs are expected to negatively impact the U.S. economy's growth, which explains wherefore determination has been an summation successful the probability of a recession. All these factors person weighed connected TSMC banal this year.

However, a person look astatine the company's income successful the archetypal 2 months of the twelvemonth suggests that the banal could travel retired of the rut it is in. Specifically, it won't beryllium astonishing to spot TSMC banal stepping connected the state erstwhile again pursuing the merchandise of its 2025 first-quarter net study connected April 17.

Let's spot wherefore TSMC is poised to present stronger-than-expected results and guidance this month.

Taiwan Semiconductor's gross successful the archetypal 2 months of 2025 accrued astatine an awesome gait of 39% erstwhile compared to the archetypal mates of months of past year. At this pace, TSMC seems good connected its mode to exceeding its gross guidance for Q1 2025.

When TSMC released its fourth-quarter 2024 results successful January this year, the institution guided for $25.4 cardinal successful gross for Q1 astatine the midpoint of its range. That would construe into a year-over-year summation of 34%, a large betterment implicit the 13% gross maturation it delivered successful the year-ago period. However, Taiwan Semi's maturation trajectory for the archetypal 2 months of the twelvemonth indicates that it could extremity up outperforming its ain expectations.

Meanwhile, net should besides turn astatine a terrific pace, considering that TSMC is expecting a year-over-year leap of 5.5 percent points successful its operating margin. Not surprisingly, analysts are expecting a 49% summation successful Q1 net from the prior-year play to $2.05 per share, though it could bash amended than that considering the robust AI spot demand.

TSMC's surging income tin beryllium attributed to the rapidly increasing request for AI chips that are present being deployed successful aggregate applications ranging from information centers to smartphones to idiosyncratic computers (PCs) to automotive. Nvidia, which is 1 of TSMC's apical customers, reported precocious that it is witnessing an unprecedented request for its latest procreation of Blackwell AI graphics processing units.