Driven by the wave of artificial intelligence, Wall Street's praise for global chip foundry giant TSMC has been overwhelming.
Recently, TSMC's market value has approached $1 trillion and surpassed Buffett's Berkshire Hathaway to become the eighth largest company in the world.
Wall Street giants are singing more and more
This week, several major Wall Street banks raised their target prices for TSMC, predicting continued strong demand for AI related products. At the same time, TSMC's chip foundry business may increase in price in 2025, which will help boost TSMC's performance.
The speculation of "price hikes" by Wall Street executives stems from recent hints from Wei Zhejia, the new chairman of TSMC. On June 4th, Wei Zhejia, the newly appointed chairman of TSMC who is fully in charge, hinted at TSMC's shareholder meeting that he is considering increasing the price of AI chip foundry:
"I have indeed complained to '3 trillion man' (as Taiwanese media estimated Huang Renxun's worth to be NT $3 trillion) that his products are too expensive," said Wei Zhejia. "I think these products are indeed very valuable, but I am also considering showcasing our value to him."
At the Taipei International Computer Show during the same period, NVIDIA CEO Huang Renxun also personally expressed his agreement that TSMC should raise prices to match the value it provides. This is also interpreted by the outside world as a signal confirming the price increase of TSMC.
Under this signal, many Wall Street giants are bullish on TSMC. Among them, Goldman Sachs is one of the most optimistic bulls. Goldman Sachs raised TSMC's target price by 19% to 1160 Taiwanese dollars this week (closing at 981 Taiwanese dollars on Thursday), and expects TSMC's contract manufacturing prices for 3-nanometer and 5-nanometer chips to increase by approximately 1% to 5%.
JPMorgan Chase, on the other hand, stated that TSMC may "raise its 2024 revenue guidance and potentially raise its capital expenditures to the higher end of the guidance range.". JPMorgan Chase predicts that by 2028, the contribution of artificial intelligence to TSMC's total revenue will reach 35%.
Citigroup and Morgan Stanley have recently raised TSMC's target price and expect TSMC's performance to be even stronger.
TSMC follows Nvidia's skyrocketing value
As a leader in the wafer foundry industry, TSMC has also made significant profits from the AI boom in the past two years. For global investors, TSMC's appeal lies not only in its cutting-edge technology and relatively low valuation, but also in its position as a major advanced chip supplier to Nvidia.
This week, Nvidia has just surpassed Apple and Microsoft, officially crowned as the world's most valuable company, marking the skyrocketing popularity of artificial intelligence in the US stock market.
Based on TSMC's American Depositary Receipts (ADRs) listed in the United States, its market value surpassed Berkshire Hathaway last week, becoming the eighth largest company in the world by market value. TSMC's ADR has risen by 73% this year, bringing its market value to $932 billion, leaving only a 7% increase from the threshold of $1 trillion.
On Tuesday, Goldman Sachs analyst Bruce Lu and others wrote in a report, "We are now seeing TSMC's risk return becoming more attractive amidst the increasing positive sentiment surrounding artificial intelligence... As the AI boom continues to spread, we believe TSMC is one of the main beneficiaries."