TSMC Set to Break $1 Trillion Valuation, And Wall Street Is Even Predicting A Stronger Future
1min read Fueled by the artificial intelligence boom, Wall Street's bullish sentiment towards global chipmaking giant TSMC continues to soar.
Recently, TSMC's market capitalization approached $1 trillion, surpassing Warren Buffett's Berkshire Hathaway to become the eighth-largest company in the world.
Wall Street Banks Turn Optimistic
This week, several Wall Street banks raised their target prices for TSMC, forecasting continued strong demand related to AI, and predicting a possible price increase for TSMC's chip foundry business in 2025. These factors are expected to boost TSMC's performance.
The speculated price increase from Wall Street banks originated from recent hints made by TSMC's new Chairman, Mark Liu. On June 4, Liu, in full command at TSMC, hinted at a potential rise in AI chip foundry prices during TSMC's annual shareholders' meeting.
During the same period at the Computex Taipei, Nvidia CEO Jensen Huang also stated that he agreed that TSMC should raise prices to match the value it provides. This was interpreted by the market as confirmation of TSMC's price hike signal.
Attracted by this signal, many Wall Street banks turned bullish on TSMC. Among them, Goldman Sachs is one of the most optimistic bulls. This week, Goldman Sachs raised TSMC's target price by 19% to NT$1160 (closed at NT$981 on Thursday) and predicted that TSMC's 3nm and 5nm chip foundry prices may rise by about 1%-5%.
JPMorgan stated that TSMC might lift its 2024 revenue guidance and potentially move up its capex to the higher end of the guidance range. JPMorgan expects that by 2028, AI will contribute 35% to TSMC's total revenue.
Citibank and Morgan Stanley also recently raised their target prices for TSMC, predicting even stronger performance for the company.
TSMC's Valuation Soars Alongside NVIDIA
As a leader in the wafer foundry industry, TSMC has significantly benefited from the AI boom over the past two years. For global investors, TSMC's appeal lies not only in its cutting-edge technology and relatively low valuation but also in its role as a major supplier of advanced chips for Nvidia.
This week, Nvidia surpassed Apple and Microsoft to officially crown itself as the world's most valuable company, marking the AI frenzy in the U.S. stock market reaching new heights.
Based on TSMC's American Depositary Receipts (ADR) listed in the U.S., its market cap surpassed Berkshire Hathaway last week, becoming the world's eighth-largest company. TSMC's ADR has risen by 77% this year.
On Tuesday, Goldman Sachs analysts Bruce Lu and others wrote in a report: 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.
