19 June 2024 , 18:39
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The bullish chorus on Taiwan Semiconductor Manufacturing Co. is growing even louder as a stock rally puts its market capitalization closer to the $1 trillion milestone.
A flurry of 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. Goldman Sachs Group Inc. is the most bullish of all, increasing its price target by 19% to NT$1,160 as it sees three- and five-nanometer chip manufacturing prices advancing by a “low single digit percentage.”
JPMorgan Chase & Co. says TSMC may “lift its 2024 revenue guidance and potentially move up its capex to the higher end of the guidance range,” and expects AI to contribute 35% of total sales by 2028. Citigroup Inc. and Morgan Stanley also raised their price targets on a stronger earnings outlook.
The foundry sector leader has emerged as a major beneficiary of the widening adoption of artificial intelligence, with its cutting-edge technology and valuation making it a favorite play among global investors. TSMC has also prospered from being the main advanced-chip supplier of Nvidia Corp. — recently crowned the world’s most-valuable company.
TSMC overtook Berkshire Hathaway Inc. last week to become the eighth-largest company globally in terms of market capitalization, based on the firm’s US-listed ADRs. The depositary receipts’ 73% gain this year has boosted the firm’s market value to $932 billion, shy of the $1 trillion threshold.
“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.”