“Seeing TSMC ADRs approach US$1 trillion valuation is a feat, but there’s much ahead with tech advancements extending at least into the 2040s,” said Morningstar Inc. analyst Phelix Lee.
TSMC’s position as the sole supplier of Apple Inc. and Nvidia Corp.’s most important chips makes it a favourite play among global investors in AI. Those US$3 trillion companies have seen their shares rise with the tide of artificial intelligence, making their indispensable chipmaker appear good value by comparison. Even with rising tensions in the Taiwan Strait, a flurry of Wall Street brokerages lifted their price targets for TSMC, citing surging AI-related demand and potential price hikes in 2025 to elevate earnings.
TSMC’s ADRs have outperformed its Taipei shares because they’re more easily accessible to foreign investors. They are also fungible, unlike the Taiwan shares, which need special regulatory approval to be converted into the US equivalent.
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Analysts Boost Targets
Monday’s rally comes after Morgan Stanley raised its target on the stock by about 9%, expecting the chip maker to raise its full-year sales estimate in the earnings announcement next week. The broker also sees TSMC hiking wafer prices due to its strong bargaining power.
“TSMC’s ‘hunger marketing’ strategy seems to be working,” Morgan Stanley analysts including Charlie Chan wrote in a note Sunday. “Our latest supply chain checks indicate that TSMC is delivering a message that leading-edge foundry supply could be tight in 2025 and customers may not get sufficient capacity allocation without appreciating TSMC’s value.”
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JPMorgan analysts including Gokul Hariharan also anticipate the company will raise its revenue guidance in the earnings call.
“We expect TSMC to sound more constructive on AI accelerator demand,” he wrote in a note Sunday.
Morgan Stanley and JPMorgan joined brokers including Nomura HoldingsInc. and Mizuho Securities Co. in expressing optimism over TSMC leading into its second-quarter results. The maker of the world’s most advanced chips — used by the likes of Apple Inc. and Nvdia Corp. — is expected to report 36% revenue growth from a year earlier, the fastest pace since the last quarter of 2022, according to data compiled by Bloomberg. The earnings optimism pushed the company’s Taipei shares past NT$1,000 ($41.53) last week.
TSMC’s shares were in the spotlight a year ago when Warren Buffett’s Berkshire Hathaway closed out a US$5 billion position in the company, highlighting the geopolitical risks from China, which claims the island as part of its territory. Since then, the stock has continued its ascent both in the US and Taiwan.
