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TSMC Nears $1 Trillion Valuation as a Result of Target Upgrades

June 19, 2024
minute read

The bullish sentiment surrounding Taiwan Semiconductor Manufacturing Co. (TSMC) is intensifying as its stock rally pushes its market capitalization closer to the $1 trillion mark.

This week, a wave of Wall Street brokerages have raised their price targets for TSMC, driven by soaring demand related to artificial intelligence and anticipated price hikes in 2025 that are expected to boost earnings. Leading the bullish outlook is Goldman Sachs Group Inc., which has increased its price target by 19% to NT$1,160, predicting a “low single digit percentage” rise in the prices for three- and five-nanometer chip manufacturing.

JPMorgan Chase & Co. forecasts that TSMC may "raise its 2024 revenue guidance and potentially increase its capital expenditures to the higher end of the guidance range," with expectations that AI will account for 35% of total sales by 2028. Citigroup Inc. and Morgan Stanley have also lifted their price targets, citing a stronger earnings outlook.

As the leading foundry sector company, TSMC has become a major beneficiary of the expanding adoption of artificial intelligence, thanks to its advanced technology and attractive valuation, making it a preferred choice among global investors. TSMC has further benefited from being the primary advanced-chip supplier to Nvidia Corp., which was recently recognized as the world’s most valuable company.

Last week, TSMC surpassed Berkshire Hathaway Inc. to become the eighth-largest company globally by market capitalization, based on its U.S.-listed American Depositary Receipts (ADRs). The ADRs’ 73% increase this year has raised TSMC’s market value to $932 billion, nearing the $1 trillion milestone.

Goldman analysts, including Bruce Lu, wrote in a note on Tuesday, "We now see even more attractive risk-reward for TSMC amid the growing, positive sentiment around AI. With the ongoing proliferation of AI, we see TSMC among the key beneficiaries."

The optimistic outlook for TSMC is fueled by its pivotal role in the tech industry and the increasing demand for cutting-edge semiconductor technology. The company's strategic position as a supplier of advanced chips for AI applications places it at the forefront of the market, poised to capture significant growth opportunities.

The raised price targets by major financial institutions underscore the market's confidence in TSMC's ability to capitalize on the AI boom and the potential for increased profitability through strategic pricing adjustments. This positive sentiment is further amplified by TSMC’s strong ties with Nvidia, which enhances its reputation and market influence.

As AI technology continues to evolve and integrate into various sectors, the demand for high-performance semiconductors is expected to rise, bolstering TSMC’s market position. The company’s continuous innovation and investment in cutting-edge technology ensure its competitive edge in the rapidly advancing tech landscape.

In summary, TSMC's stock rally and the wave of increased price targets reflect the growing optimism surrounding the company's future prospects. The combination of rising AI-related demand, potential price hikes, and TSMC’s strategic role in the tech industry positions it as a key player poised to achieve significant market growth. The company’s nearing $1 trillion market capitalization milestone is a testament to its robust performance and the positive market sentiment driving its continued success.

Bryan Curtis
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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