In the wave of AI, TSMC's US stock price has accumulated a rise of over 76% so far this year. Last week, TSMC surpassed "Oracle of Omaha" Warren Buffett's Berkshire Hathaway to become the world's eighth most valuable company by market capitalization. This week, TSMC's stock price reached new heights, with its market value approaching $1 trillion.
As it is on the verge of joining the "trillion-dollar club," this week Goldman Sachs, JPMorgan Chase, and several other Wall Street investment banks have raised their target prices for TSMC. They believe that the surge in AI-related demand and the company's potential price increases by 2025 will boost TSMC's profits.
Goldman Sachs is the most optimistic about TSMC's prospects. The bank has raised its target price for TSMC by 19% to 1160 New Taiwan dollars, expecting the company's 3-nanometer and 5-nanometer chip manufacturing prices to rise by a "low single-digit percentage."
JPMorgan Chase stated that TSMC may raise its revenue outlook for 2024 and could also increase capital expenditures to the higher end of the guidance range.
JPMorgan Chase estimates that by 2028, artificial intelligence's contribution to TSMC's total sales will be 35%.
Advertisement
TSMC has also previously indicated that it expects capital expenditures to be between $28 billion and $32 billion in 2024, and it may increase to $35 billion to $40 billion in 2025. These substantial budgets are primarily allocated to the research and development and production of 2/3-nanometer processes.
Recently, both Citigroup and Morgan Stanley have also raised their target prices for TSMC. Both investment banks believe that with the rapid development and expanding applications of AI technology, TSMC will benefit from the demand for chips in data centers and edge AI, especially at the more advanced 2/3-nanometer process nodes.
Citigroup predicts that by the end of 2025, most of the world's AI GPUs will migrate to the 3-nanometer process, which will bring more orders to TSMC. Its 3-nanometer process utilization rate is expected to remain tight next year.
TSMC is expected to receive more 3-nanometer chip orders in 2025, particularly from clients such as Apple, Qualcomm, and MediaTek.
Additionally, an analysis team led by Morgan Stanley analyst Charlie Chan released a research report on June 5th, predicting that TSMC may increase wafer prices by 5% in 2025 to maintain its gross margin at or above 53%. They also stated that if Nvidia accepts the price increase, other key AI clients may follow suit.In the wave of AI, as the main chip foundry for tech giants, TSMC has reaped substantial benefits. Goldman Sachs analyst Bruce Lu stated, "With the continuous development of artificial intelligence, we believe TSMC is one of the main beneficiaries."
AI chip orders are high, leading to strong growth in TSMC's sales in May. The company's sales for May reached 229.62 billion New Taiwan dollars (approximately $7.114 billion), a year-on-year increase of 30.1%.
From January to May of this year, TSMC's cumulative sales amounted to 1.06 trillion New Taiwan dollars (approximately $32.839 billion), a year-on-year increase of 27%.
Liu De-Yin, then Chairman of TSMC, expressed at the shareholders' meeting that the demand for AI is more optimistic than a year ago. With the application of AI and the higher demands on the company from chips, TSMC is confident in its future growth.
Leave a Comment