Market capitalization milestone
TSMC's stock has been on a remarkable rally, with its market capitalization nearing the $1 trillion mark [1]. Last week, TSMC overtook Berkshire Hathaway, becoming the eighth-largest company globally by market capitalization, based on its US-listed American Depositary Receipts (ADRs). This year alone, TSMC's ADRs have surged 73%, elevating the company's market value to an impressive $932 billion. The anticipation of crossing the $1 trillion threshold adds a layer of excitement for investors like me, who have been tracking TSMC’s growth closely.
AI adoption and technological leadership
One of the key drivers of TSMC's meteoric rise is its integral role in the AI revolution. The company’s cutting-edge technology has positioned it as a major beneficiary of the increasing adoption of AI. As the primary advanced chip supplier for Nvidia Corp., now the world’s most valuable company, TSMC has cemented its place at the forefront of the semiconductor industry. This strategic partnership has bolstered TSMC's revenue and enhanced its reputation among global investors.
Positive analyst sentiment
The optimism surrounding TSMC is echoed by Wall Street analysts, who have been raising their price targets for the company. The surge in AI-related demand and potential price hikes in 2025 are key factors driving this positive outlook. For instance, JPMorgan Chase & Co. adjusted its AI revenue estimate for TSMC to constitute 35% of its total sales by 2028. Similarly, Citigroup Inc. has increased its price target by 12%, citing a stronger earnings outlook. [1]
Goldman Sachs Group Inc. has also expressed a favourable view, noting that prices for TSMC’s three and five-nanometer chip manufacturing are expected to advance by a low single-digit percentage. Goldman Sachs raised its 12-month price target by 19% to NT$1,160, reflecting its confidence in TSMC's future performance. In a recent note, Goldman analysts, including Bruce Lu, highlighted the attractive risk-reward profile for TSMC amid the growing positive sentiment around AI. They emphasized that with the ongoing proliferation of AI, TSMC is poised to be a key beneficiary. [2]
Conclusion
As an investor, the current trajectory of TSMC is highly encouraging. The company’s strong market capitalization growth, coupled with its strategic positioning in the AI sector, underscores its potential for continued success. The positive analyst sentiment further reinforces my confidence in TSMC's prospects. With the anticipation of crossing the $1 trillion market capitalization milestone, TSMC represents a compelling investment opportunity.
Reflecting on these developments, I am optimistic about the future of TSMC. The company's strategic partnerships, technological advancements, and favourable market conditions make it a standout player in the semiconductor industry. As TSMC continues to navigate the evolving landscape of AI and advanced technologies, I am confident it will deliver substantial returns for its investors.
* Past performance is no guarantee of future results
[1], [2] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
[1] Development of the TSMC shares over five years: https://tradingeconomics.com/tsm:us