(Bloomberg) — Taiwan Semiconductor Manufacturing Co. briefly surpassed $1 trillion in market value after Morgan Stanley joined the list of brokers raising price targets on the chipmaker ahead of its earnings.
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TSMC ADRs jumped 4.8%, touching the milestone after the opening bell in New York on Monday, lifting its share price this year to more than 80%. The Taiwanese chipmaker surpassed Berkshire Hathaway Inc. earlier in June to become the world’s eighth-most valuable company, based on its ADRs, which trade at a significant premium to its Taipei-traded shares.
“Seeing TSMC’s ADRs approach a trillion-dollar valuation is an achievement, but there is much more to come with technological advances extending into at least the 2040s,” said Morningstar analyst Felix Lee.
TSMC’s position as the sole supplier of key chips to Apple Inc. and Nvidia Corp. makes it a favorite among global investors in artificial intelligence. The $3 trillion companies have seen their shares soar with the AI wave, making the indispensable chipmaker look well-valued by comparison. Even as tensions in the Taiwan Strait escalate, a group of Wall Street brokerages have raised their price targets for TSMC, citing growing AI-related demand and a potential price spike in 2025 to boost earnings.
TSMC’s American depositary receipts have outperformed its Taipei shares because they are more accessible to foreign investors. They are also fungible, unlike Taiwanese shares, which require special regulatory approval to convert to their U.S. counterparts.
Analysts boost targets
Monday’s rally comes after Morgan Stanley raised its target on the stock by about 9%, expecting the chipmaker to raise its full-year sales estimates in next week’s earnings call. The broker also sees TSMC raising chip prices due to its strong negotiating power.
“TSMC’s ‘hungry marketing’ strategy appears to be working,” Morgan Stanley analysts including Charlie Chan wrote in a note on Sunday. “Our latest supply chain checks suggest that TSMC is sending a message that advanced alloy mill supplies may be tight in 2025 and customers may not get adequate capacity allocation without appreciating TSMC’s value.”
JPMorgan analysts, including Gokul Hariharan, expect the company to raise its revenue guidance on the earnings call.
“We expect TSMC to be more positive about AI accelerator demand,” he wrote in a note on Sunday.
Morgan Stanley and JPMorgan joined brokers including Nomura Holdings Inc. and Mizuho Securities in expressing optimism about TSMC ahead of second-quarter results. The maker of the world’s most advanced chips — used by the likes of Apple Inc. and Nvdia Corp. — is expected to report revenue growth of 36% from a year earlier, the fastest pace since the fourth quarter of 2022, according to data compiled by Bloomberg. The earnings optimism pushed the company’s Taipei-based shares above 1,000 Taiwan dollars (about $31) last week.
Shares of Taiwan Semiconductor Manufacturing Co. were in the spotlight a year ago when Warren Buffett’s Berkshire Hathaway closed a $5 billion stake in the company, highlighting geopolitical risks from China, which claims the island as its territory. Since then, the stock has continued to climb in both the U.S. and Taiwan.
Read: Popular arbitrage trade backfires as TSMC frenzy escalates in the US
(Updates to add Morningstar and Berkshire Hathaway commentary)
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