TSMC nears $1 trillion valuation as target hikes fuel rally

(Bloomberg) — The chorus of optimism for Taiwan Semiconductor Manufacturing Co. is getting louder as a stock rally brings the company’s market capitalization a step closer to the trillion-dollar mark.

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TSMC overtook Berkshire Hathaway Inc. last week to become the world’s eighth-largest company in terms of market capitalization, based on the company’s U.S.-listed ADRs. The 73% gain in depositary receipts this year has pushed the company’s market value to $932 billion, just under the trillion-dollar mark.

The industry leader in the foundry sector has proven to be a major beneficiary of the increasing adoption of artificial intelligence, and is a popular candidate among global investors due to its cutting-edge technology and valuation. TSMC has also benefited from being the main supplier of advanced chips to Nvidia Corp. – which was recently named the world’s most valuable company.

Wall Street brokers raised their price targets on TSMC this week, citing rising demand for AI and possible price increases in 2025 as the reason for rising earnings. JPMorgan Chase & Co. raised its AI revenue estimate to 35% of total revenue by 2028, while Citigroup Inc. raised its price target by 12% on improving earnings prospects.

Goldman Sachs Group Inc. expects manufacturing prices of three- and five-nanometer chips to rise by a “low single-digit percentage” and raised its price target for the next 12 months by 19% to NT$1,160.

“We now see an even more attractive risk-reward proposition for TSMC given the growing positive sentiment around AI,” Goldman analysts, including Bruce Lu, wrote in a note on Tuesday. “As AI becomes more widely adopted, we see TSMC as a key beneficiary.”

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