One global chip stock is getting so much love that as many as 14 analysts have raised their price targets in the past two weeks. That is Taiwan Semiconductor Manufacturing Co., Ltd., or Taiwan Semiconductor Manufacturing Co., Ltd. The stock has soared amid the artificial intelligence craze. It has risen about 35% so far this year and is up 60% from the same period last year. There is strong demand for advanced chips, especially those used in artificial intelligence applications. TSMC is the world’s largest producer of advanced processors, and Nvidia relies on it to make its graphics processing units. Last month, the chipmaker reported first-quarter revenue and profit that beat expectations. This is thanks to strong demand for advanced chips, especially those used in artificial intelligence applications. According to a CNBC Pro FactSet screen, 14 analysts have raised their price targets on the stock in the past two weeks, but none have downgraded the stock. People covering the stock said they were optimistic given factors such as demand for artificial intelligence. “TSMC stock remains attractive as AI-related demand continues to surprise us and sentiment in the automotive and industrial markets has limited downside,” said Morningstar equity analyst Phelix Lee. Additionally, he added, TSMC’s “disciplined approach” to capital expenditures this year and likely in the coming years reduces the risk of oversupply. Surprising revenue came from orders for artificial intelligence servers being shipped faster than expected. “(This illustrates) TSMC’s ability to eliminate bottlenecks in the advanced packaging stage,” Lee said. Dan Kim, senior investment analyst at Saturna Capital, said that one of the risks that investors tend to consider in this type of chip stocks is U.S.-China trade restrictions. But he thinks this is overblown. “Whenever news breaks of U.S.-China trade restrictions, semiconductor groups, including TSMC, are usually punished,” he told CNBC Pro. “The reality is exactly the opposite. Without access to leading equipment, China has to order more traditional It is estimated that this “inefficiency” may increase the demand for equipment by about 10% over time,” Kim added. When talking about artificial intelligence, Kim also said, Each large language model upgrade cycle requires about 100 times the computing power upgrade. ChatGPT is currently in its fourth version, and he pointed out that TSMC’s stock price is higher than its five-year historical median price-to-earnings ratio (PE). ) 20.3 is 10% higher. He said that if the stock’s valuation returns to the 20.3 P/E ratio and assumes that the above artificial intelligence trends are realized, then “it will be attractive to go long on the stock.” Analysts have a 95% buy or overweight rating on TSMC, giving TSMC a potential upside of 16.3% based on a consensus target price of NT$932.98 ($28.74), according to FactSet. TSMC is also listed in the U.S. Correction: The title and text of this article have been updated to reflect that 14 analysts have upgraded TSMC’s price targets, rather than ratings, over the past two weeks.
