Taiwan Semiconductor Manufacturing Co. (TSMC) briefly hit a market cap of $1 trillion after Morgan Stanley joined a list of brokers raising price targets on the semiconductor company ahead of the release of its quarterly results.
TSMC American Depositary Receipts (ADRs) shares they went up up 4.8%, reaching the milestone shortly after the New York Stock Exchange opened on Monday, taking its price increase this year to more than 80%. In June, the Taiwanese chipmaker surpassed Berkshire Hathaway Inc. to become the world’s eighth-most valuable company, based on its ADRs, which trade at a considerable premium to its Taipei-listed shares.
“Seeing TSMC ADRs approach a $1 trillion valuation is an achievement, but there is still much more to come with technological advances extending at least into the 2040s,” said Phelix Lee, an analyst at Morningstar Inc.
TSMC’s position as the sole supplier of the most important chips to Apple Inc. and Nvidia Corp. makes it a favorite choice among global artificial intelligence (AI) investors. The $3 trillion companies have seen their shares surge on the AI wave, making their indispensable chipmaker look like a good value by comparison. Despite rising tensions in the Taiwan Strait, a flurry of Wall Street traders raised their price targets for TSMC, citing rising AI-related demand and potential price increases in 2025 to lift earnings.
TSMC ADRs have outperformed its shares in Taipei because they are more accessible to foreign investors. They are also fungible, unlike Taiwanese shares, which require special regulatory approval to be converted into their U.S. equivalent.
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Analysts raise targets
Monday’s rally came after Morgan Stanley raised its target on the stock by about 9%, expecting the chipmaker to boost its annual sales estimate at next week’s earnings announcement. The brokerage also expects TSMC to raise wafer prices due to its strong negotiating power.
“TSMC’s ‘starvation marketing’ strategy appears to be working,” Morgan Stanley analysts including Charlie Chan wrote in a note on Sunday. “Our latest supply chain checks indicate that TSMC is sending a message that cutting-edge foundry supply could be tight in 2025 and customers may not get sufficient capacity allocation without appreciating TSMC’s value.”
JPMorgan analysts, including Gokul Hariharan, also expect the company to raise its revenue guidance on the earnings call.
“We expect TSMC to sound more constructive on demand for AI accelerators,” he wrote in a note on Sunday.
Morgan Stanley and JPMorgan joined brokerages including Nomura Holdings Inc. and Mizuho Securities Co. in expressing optimism about TSMC ahead of its second-quarter results. The maker of the world’s most advanced chips, used by companies including Apple Inc. and Nvidia Corp., is expected to report revenue growth of 36% from a year earlier, the fastest pace since the final quarter of 2022, according to data compiled by Bloomberg. The upbeat results pushed the company’s shares in Taipei past NT$1,000 (about $31) last week.
TSMC stock was in the spotlight a year ago when Warren Buffett’s Berkshire Hathaway closed a $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 rise in both the U.S. and Taiwan.
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