The bullish chorus on Taiwan Semiconductor Manufacturing Co is growing even louder as an unstoppable stock rally puts its market capitalisation one step closer to the US$1-trillion milestone.
TSMC overtook Berkshire Hathaway last week to become the eighth largest company globally in terms of market capitalisation, based on the firm’s US-listed ADRs. The depository receipts’ 73% gain this year has boosted the firm’s market value to $932-billion, shy of the $1-trillion threshold.
The foundry sector leader has emerged as a major beneficiary of the widening adoption of artificial intelligence, with its cutting-edge technology and reasonable valuation making it a favourite play among global investors. TSMC has also prospered from being the main advanced-chip supplier of Nvidia, which on Tuesday was crowned the world’s most valuable company.
Wall Street brokerages have lifted their price targets for TSMC this week, citing surging AI-related demand and potential price hikes in 2025 to drive up earnings. JPMorgan Chase & Co raised its AI revenue estimate to 35% of total sales by 2028 while Citigroup lifted its price target by 12% on a stronger earnings outlook.
Goldman Sachs Group sees 3- and 5-nanometre chip manufacturing prices advancing by a “low single digit percentage”, and increased its 12-month price target by 19% to NT$1 160.
“We now see even more attractive risk-reward for TSMC amid the growing, positive sentiment around AI,” Goldman analysts including Bruce Lu wrote in a note on Tuesday. “With the ongoing proliferation of AI, we see TSMC among the key beneficiaries.” — John Cheng, (c) 2024 Bloomberg LP