Why Analysts Are Raving About This Chip Giant


**TSMC Surges on Artificial Intelligence Boom: Analysts Shower Love**

**A Torrent of Upgrades**

The world’s tech scene is buzzing with enthusiasm for one particular chipmaker: Taiwan’s TSMC, or Taiwan Semiconductor Manufacturing Company. In just two short weeks, a staggering 14 analysts have upgraded the stock, showering it with love and optimism. Not one downgrade in sight!

This outpouring of support stems from the company’s soaring stock price, which has skyrocketed 35% this year and an impressive 60% over the past 12 months. The driving force behind this surge? The burgeoning artificial intelligence (AI) revolution.

**AI-Fueled Chipset Craze**

AI is fueling an insatiable demand for advanced chips, particularly those used in AI applications. Guess who’s the world’s undisputed leader in advanced processor production? Yep, you guessed it: TSMC. Even chip giant Nvidia relies on TSMC to manufacture its powerful graphics processing units.

Last month, TSMC stunned the market with quarterly results that far surpassed expectations. Revenue and profits hit the stratosphere, thanks in large part to the insatiable demand for those AI-powered chips.

**Analysts Jump on the Bandwagon**

Based on a thorough CNBC Pro FactSet screen, it’s clear that analysts are smitten with TSMC’s prospects. All 14 upgrades in the past two weeks are a testament to their unshaken confidence in the company.

Phelix Lee, equity analyst at Morningstar, sums up the bullish sentiment: “TSMC’s shares remain a compelling investment opportunity, as AI-related demand continues to surprise on the upside. We also see limited downside for automotive and industrial markets.”

He highlights TSMC’s disciplined approach to capital spending, which mitigates the risk of oversupply in the coming years. The company’s ability to swiftly remove bottlenecks in the advanced packaging stage is also a major plus, as Lee points out.

**Navigating Trade Headwinds**

Investors often fret about the potential impact of U.S.-China trade restrictions on chip stocks like TSMC. However, Dan Kim, senior investment analyst at Saturna Capital, believes these fears are overblown.

“历史往往证明,每当出现美中贸易限制的消息时,半导体类股(包括台积电)往往会受到惩罚,”他对CNBC Pro表示.”但实际上,恰恰相反.”

Kim explains that China’s lack of access to cutting-edge equipment forces it to rely on more legacy equipment to keep pace with the West. This “inefficiency” creates an additional ~10% in equipment demand over time.

**AI’s Insatiable Compute Hunger**

Kim also shed light on the exponential compute capacity requirements of large language model upgrades. With ChatGPT currently in its fourth iteration, the world is gearing up for GPT8. Kim notes that TSMC is currently trading at a premium to its five-year historical median PE ratio of 20.3.

If the stock’s valuation reverts to that level amid the ongoing AI trend, it could present an “attractive setup to be long the stock,” Kim suggests.

**Market Consensus**

According to FactSet, TSMC enjoys an overwhelming 95% buy rating from analysts, with a consensus price target of 932.98 New Taiwan dollars (.74), implying a 16.3% upside potential. The company is also listed in the U.S., providing investors with convenient access to this global chip powerhouse.

As the world embraces the transformative power of AI, TSMC stands poised to ride the wave of innovation and deliver exceptional returns for investors. With its impeccable track record, cutting-edge technology, and strong analyst support, TSMC remains a beacon of excellence in the high-flying chip industry.

Data sourced from: cnbc.com