In the past two weeks, TSMC, the world's leading chip maker, has been highly sought after, and 14 analysts have successively raised its stock ratings.
Over the past two weeks, as many as 14 analysts raised their ratings for a global chip stock. It was TSM.N.
With artificial intelligence booming, the company's stock price has been soaring. The stock is up about 41% so far this year.
TSMC is the world's largest manufacturer of advanced processors, and Nvidia (NVDA.O) GPUs also rely on TSMC.
Last month, the chipmaker announced that first-quarter results surpassed revenue and profit expectations. This is due to strong demand for advanced chips, particularly for artificial intelligence applications.
The CNBC Pro FactSet screen shows that 14 analysts have raised TSMC stock ratings in the past two weeks, and no one has downgraded them. People reporting on the stock said they are optimistic about the stock considering factors such as demand for artificial intelligence. Philip Lee, a stock analyst at Morningstar, said, “TSMC shares are still attractive given the continuing surprise demand related to artificial intelligence and the limited room for sentiment to decline in the automotive and industrial markets.”
Additionally, he added that TSMC's “disciplinary capital expenditure” this year and the next few years has reduced the risk of oversupply, and that the unexpected revenue increase comes from AI server orders being shipped faster than expected.
“This shows TSMC's ability to break through the bottlenecks in the advanced packaging phase,” Lee said. Dan Kim, senior investment analyst at Saturna Capital, said that one risk investors tend to consider such chip stocks is trade restrictions between the US and China. But he thought that was exaggerated. “Every time news of trade restrictions between China and the US comes out, semiconductor companies are usually greatly affected,” he said. But the reality is quite the opposite.
When talking about artificial intelligence, Kim also said that each major language model upgrade cycle requires an upgrade in computing power of about 100 times. ChatGPT is currently in its fourth edition, and he noted that the world is working towards GPT8. He pointed out that if TSMC's valuation returns to the PE (price-earnings ratio) level of 20.3 and is based on the artificial intelligence trend described above, then holding the stock would be an “attractive allocation.” According to FactSet data, TSMC has a 95% buying rating among analysts. According to the consensus price target, TSMC has a potential increase of 16.3%, and the target price is NT$932.98 ($28.74).