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TSMC Nears $1 Trillion Market Cap Amid AI Boom
The bullish sentiment surrounding Taiwan Semiconductor Manufacturing Co. (TSMC) is intensifying, as the company witnesses an unstoppable stock rally propelling its market capitalization closer to the $1 trillion mark. Last week, TSMC surpassed Berkshire Hathaway Inc. to become the eighth-largest company globally by market capitalization, courtesy of its US-listed American Depositary Receipts (ADRs). These ADRs have surged by 73% this year, increasing TSMC's market value to $932 billion, just shy of the trillion-dollar milestone.
TSMC, a leader in the foundry sector, has greatly benefited from the expanding adoption of artificial intelligence (AI). The company's state-of-the-art technology and appealing valuation have made it a favored choice among international investors. Being the primary advanced-chip supplier for Nvidia Corp., the newly crowned world's most valuable company, has further bolstered TSMC's standing. Increased AI-related demand and potential price hikes projected for 2025 have led Wall Street brokerages to elevate their price targets for TSMC this week.
For instance, JPMorgan Chase & Co. has adjusted its AI revenue estimate to represent 35% of TSMC's total sales by 2028. Similarly, Citigroup Inc. has upped its price target by 12%, citing a robust earnings forecast. Goldman Sachs Group Inc. predicts a "low single digit percentage" increase in manufacturing prices for three- and five-nanometer chips, prompting it to raise 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," stated Goldman analysts, including Bruce Lu, in a note on Tuesday. They further add, "With the ongoing proliferation of AI, we see TSMC among the key beneficiaries."
As artificial intelligence continues to proliferate, TSMC's strategic positioning and technological advancements make it a central beneficiary of this transformative sector. With increasing support from major financial institutions, the company seems poised for further growth, putting it on an imminent path to reach the $1 trillion market capitalization threshold.
