Source: Wall Street News Author: Ge Jiaming

The “trillion dollar club”, which has long been dominated by tech giants such as Microsoft and Apple, may soon join new members. “Stock god” Buffett's Berkshire Hathaway, Lilly, which “makes big money” on diet pills, and Nvidia's most important supplier, TSMC, are all viewed by the outside world as “strong competitors” to break the trillion-dollar market capitalization.

As of February 28, Berkshire Hathaway, Eli Lilly, and TSMC have all ranked in the top ten of the US stock market capitalization list, higher than Tesla, which is at the end of the “Big Seven.”

So far this year, Eli Lilly, Berkshire Hathaway Class B shares, and TSMC US stocks have risen by 28%, 13.7%, and 25%, respectively.

Media analysis points out that the emergence of Berkshire Hathaway, Eli Lilly, and TSMC has provided investors who previously focused on tech giants with a new choice, and may become a driving force for the rise in US stocks in the future.

Matt Orton, chief market strategist at Raymond James Investment Management, said that in addition to the “Big Seven,” there are other companies that can make the market excited, which is a good thing for the market:

I think this is a good thing for the market, reflecting the widespread rise in the non-tech sector. Apart from large technology companies, there are probably many other things in the market that deserve investors' attention.

“The Tortoise and the Rabbit” all take the opportunity to move

According to media reports, if an animal were to be used as an analogy to the process of Berkshire's market capitalization rise, it is probably more like a “turtle” crawling slowly, while Lilly is more like a “rabbit” that is only as light as the wind and leaping through a field. Well, it seems that TSMC is somewhere in between. With its steady position in the semiconductor industry, as well as stable financial performance and strategic vision, it continues to rise.

Looking at it over time, Berkshire's market capitalization has been slowly rising for many years. Currently, its market value is close to 900 billion US dollars. In the past two years, Eli Lilly's market value has rapidly tripled to more than 700 billion US dollars due to the aura of “diet pills,” while TSMC has been rapidly rising since last year, taking advantage of AI and Nvidia.

According to media analysis, as long as these three companies can replicate the 2023 increase in the next few months, their market capitalization will surpass trillion dollars and join the ranks of tech giants such as Apple, Microsoft, and Nvidia.

Thanks to the strong performance of the insurance business and the increase in investment income, stock god Buffett Berkshire Hathaway's operating profit surged 30% last quarter, and net profit doubled year-on-year. But even Buffett, known as the Omaha prophet, can't judge whether earnings growth will continue. He recently reminded investors in a shareholder letter that Berkshire is almost “unlikely to achieve astonishing results” in the next few years.

However, some analysts believe that Berkshire's steady rise in market capitalization itself is attractive and may be a catalyst for stock prices. Quincy Krosby, chief global strategist at LPL Financial, said, “If the market believes that the company has made a smart deal — Buffett usually causes the market to respond in this way, then it will drive the company's stock price to rise further, and Berkshire Hathaway can further increase by more than a trillion dollars.”

Investment banks' optimistic expectations for Eli Lilly's future revenue are also heating up. Earlier this month, Morgan Stanley analyst Terence Flynn raised Eli Lilly's target share price from $805 to $950, the highest in the industry. Flynn pointed out that Eli Lilly is expected to become the first biopharmaceutical company with a market capitalization of 1 trillion US dollars with orforglipron, an oral GLP-1 drug currently being tested.

Shams Afzal, portfolio manager at Carnegie Investment Counsel, believes that from treating heart failure to sleep apnea, Eli Lilly's weight loss treatments are expected to open up new markets, which may drive Eli Lilly's trillion-dollar journey:

“Eli Lilly has truly become a unicorn in the biopharmaceutical sector, and the future will reach $1 trillion.”

As for TSMC, according to the ranking of the top ten global foundry companies for the third quarter of 2023 published by TrendForce, TSMC still has an absolute advantage, maintains a global dominance in the field of wafer foundry, and is firmly in the top position in the industry.

Some analysts believe that, driven by emerging technologies such as AI and high-performance computing, the importance of advanced manufacturing processes in the foundry industry is becoming more and more prominent. Due to its technological leadership, cost structure, and pricing capabilities, TSMC is expected to drive the company's performance to record high levels. Therefore, analysts are targeting TSMC's share price at $140.60:

TSMC is currently the chip OEM for Nvidia's AI chip, A100/H100, and is also AMD's exclusive chip OEM. These all show the importance of TSMC in providing foundry services to top AI chip giants.

According to the latest forecast from market research firm Gartner, the AI chip market size will increase 25.6% over the previous year to reach US$67.1 billion by 2024. It is estimated that by 2027, the AI chip market is expected to be more than double the size of 2023, reaching US$119.4 billion.

edit/lambor