July 8, 2024 - $Taiwan Semiconductor (TSM.US)$shares rose 3.70% to $190.800 in pre-market trading on Monday.
Based on expectations of chip price increases, Wall Street is collectively optimistic about TSMC's performance growth.
Morgan Stanley
Morgan Stanley has maintained an overweight rating on TSMC, with its target price raised from 1080 New Taiwan dollars to 1180 New Taiwan dollars, an increase of 9.3%. The reason is the anticipated sustainability of demand for AI semiconductors, as well as the trend of rising wafer prices.
In a report on Sunday, Morgan Stanley analysts wrote, "TSMC's 'starvation marketing' strategy appears to be working. Our latest supply chain survey indicates that TSMC is conveying a message that supply could be tight by 2025, and if customers don't appreciate the value of TSMC, they may not be able to secure sufficient capacity allocation."
Macquarie
In the latest report released by Macquarie, based on its supply chain surveys, the majority of TSMC's clients have agreed to higher Original Equipment Manufacturer (OEM) prices in exchange for reliable supply, which will further drive TSMC's gross margin to climb. According to estimates, TSMC's gross margin will climb to 55.1% by 2025 and will approach nearly 60%, reaching 59.3%, by 2026.
In view of the growing profit outlook year by year, Macquarie not only maintains an "Outperform" rating for TSMC but also raises its target price for TSMC's shares on the Taiwan stock market by 28% to 1,280 New Taiwan Dollars. Compared to the current price, this represents a potential upside of over 27%. Macquarie believes that driven by the trend of artificial intelligence development, TSMC's demand visibility is better than the historical average. As TSMC creates value for its customers, Macquarie is confident that the company will be able to increase its pricing.
Goldman Sachs
Goldman Sachs has raised its target price for TSMC by 19% to 1160 New Taiwan dollars, anticipating that the prices for 3nm and 5nm chips will increase by a "low single-digit percentage."
Other financial institutions that are also bullish on TSMC include HSBC with a target price of 1370 New Taiwan dollars, Citibank with 1150 New Taiwan dollars, Barclays with 1096 New Taiwan dollars, and J.P. Morgan with 1080 New Taiwan dollars.
Optimistic profit sentiment has driven the company's share price in Taipei to break through 1000 New Taiwan dollars per share (approximately 31 US dollars) last week, making it the world's eighth-largest company, with a current market capitalization of over 950 billion US dollars.
