TSMC Hits $1 Trillion in Market Value on Relentless AI Rally

(Bloomberg) — Taiwan Semiconductor Manufacturing Co. briefly surpassed $1 trillion in market capitalization after Morgan Stanley joined a list of brokers boosting price targets on the chipmaker before its earnings.

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TSMC ADRs shares jumped as much as 4.8%, to touch the milestone just after the opening bell in New York on Monday, taking its share price increase this year to more than 80%. The Taiwanese chipmaker overtook Berkshire Hathaway Inc. earlier in June to become the world’s eighth most valuable company, based on its ADRs, which trade at a considerable premium to its Taipei-traded shares.

TSMC’s position as the sole supplier of Apple Inc. and Nvidia Corp.’s most important chips makes it a favorite play among global investors in AI. Those $3 trillion companies have seen their shares rise with the tide of artificial intelligence, making their indispensable chipmaker appear good value by comparison. Even with rising tensions in the Taiwan Strait, a flurry of Wall Street brokerages lifted their price targets for TSMC, citing surging AI-related demand and potential price hikes in 2025 to elevate earnings.

TSMC’s ADRs have outperformed its Taipei shares because they’re more easily accessible to foreign investors. They are also fungible, unlike the Taiwan shares, which need special regulatory approval to be converted into the US equivalent.

Boosted Price Targets

Monday’s rally comes after Morgan Stanley raised its target on the stock by about 9%, expecting the chip maker to raise its full-year sales estimate in the earnings announcement next week. The broker also sees TSMC hiking wafer prices due to its strong bargaining power.

“TSMC’s ‘hunger marketing’ strategy seems to be working,” Morgan Stanley analysts including Charlie Chan wrote in a note Sunday. “Our latest supply chain checks indicate that TSMC is delivering a message that leading-edge foundry supply could be tight in 2025 and customers may not get sufficient capacity allocation without appreciating TSMC’s value.”

JPMorgan analysts including Gokul Hariharan also anticipate the company will raise its revenue guidance in the earnings call.

“We expect TSMC to sound more constructive on AI accelerator demand,” he wrote in a note Sunday.

Morgan Stanley and JPMorgan joined brokers including Nomura Holdings Inc. and Mizuho Securities Co. in expressing optimism over TSMC leading into its 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 36% revenue growth from a year earlier, the fastest pace since the last quarter of 2022, according to data compiled by Bloomberg.

The earnings optimism pushed the company’s Taipei shares past NT$1,000 (about $31) last week. Its market value based on the American depositary receipts recently briefly surpassed Berkshire Hathaway Inc. to become the eighth-largest company globally, and it now has a market cap of over $950 billion.

(Rewrites throughout and updates stock move.)