tsmc stock soars to record high amid ai investment surge

2024-12-24 tsmc

Hsinchu, Tuesday, 24 December 2024.
Taiwan Semiconductor Manufacturing Company (TSMC) has achieved a historic milestone with its stock prices reaching unprecedented levels. This surge is largely attributed to the global enthusiasm for artificial intelligence investments. TSMC shares have skyrocketed by 84% this year. This reflects investors’ keen interest in AI-related assets and TSMC’s pivotal role as a leading supplier. The stock briefly surpassed its previous peak in November, driven by a rally in US chip stocks, including key customer Nvidia. TSMC’s US-listed shares are trading at a significant premium compared to its domestic market, underscoring global investors’ willingness to pay for stocks benefiting from the AI boom. As the year closes, TSMC is on track to cap its best annual stock performance since 1999, marking a significant achievement in its history. The company remains a favored choice for those looking to invest in AI without picking specific technology winners.

Market performance and valuation metrics

TSMC’s remarkable performance is reflected in its current market capitalization of US$856.31 billion [3]. The company has demonstrated strong financial fundamentals with earnings of US$31.71 billion and revenue of US$81.06 billion [3]. The stock’s trajectory shows impressive momentum, trading between NT$98.80 and NT$212.60 over the past 52 weeks [3]. TSMC’s American Depositary Receipts (ADRs) command a 24.6% premium over its Taipei-listed shares [6], highlighting strong international investor confidence.

AI-driven growth and expert perspectives

Investment experts view TSMC as a strategic entry point into the AI sector. Kevin Net from Financiere de L’Echiquier emphasizes that TSMC offers a rational approach to AI investment without the need to select specific technology winners [1]. Market anticipation is building for upcoming catalysts, including Nvidia’s presentation at CES 2025 and TSMC’s forthcoming earnings report [1]. The company maintains robust profitability with a gross margin of 54.45% and a net profit margin of 39.12% [3].

Regulatory challenges and market dynamics

Recent regulatory developments have impacted TSMC’s operations. The company halted shipments of advanced 7-nanometer chips to Chinese customers from November 11, 2024, following US Commerce Department directives [5]. This decision came after concerns about chips found in Huawei AI processors [5]. Despite these challenges, TSMC’s stock has outperformed the US market’s return of 23.9% over the past year [3], with analysts maintaining a strong buy rating and a price target of $228.75 [4].

Bronnen

TSMC AI rally