October 15, 2024

Nvidia Soars, Boosting Hopes for Chip Giant TSM

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Nvidia (NASDAQ:NVDA), a fabless semiconductor company, reached a new all-time high on October 14th, making its market capitalization the second-largest at $3.40 trillion, trailing behind Apple (NASDAQ:AAPL) which market cap is $3.52 trillion.

Nvidia’s near-term outlook gives an upbeat in Taiwan Semiconductor Manufacturing Company (NYSE:TSM) as the largest foundry that manufactures 60% of the world’s semiconductors and over 90% of the most advanced chips. As a prime chip supplier to Nvidia, TSM is poised to get raise in value too.

TSM will announce its third quarter (Q3) results on October 17, the same date as Netflix’s Q3 release schedule, and the analysts expectations are high.

The artificial intelligence (AI) boom that drives demand for chips is expected to benefit the chipmaker and analysts suggest a 40% surge in TSM’s Q3 profits. SmartEstimate estimated TSM’s net profit to be T$298.2 billion or equal to US$9.27 billion at the end of the third quarter.

When most TSM’s major tech clients such as Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA), AMD (AMD, and Qualcomm (NASDAQ:QCOM) and Mediatek rely heavily on TSM’s technologies, the shares’ prices have also surged during the AI boom. TSM as the chipmaker is poised to reap the rewards of the thriving semiconductor market.

Currently TSM is expanding its reach by building three new factories in Arizona, that is estimated to cost $65 billion, and also planning to expand its presence in Europe.

Based on the one year price targets offered by 15 analysts, the average target price for Taiwan Semiconductor Manufacturing Co Ltd is $206.54 with a high estimate of $265.00 and a low estimate of $119.37. The average target implies an upside of +7.46% from the current price of $192.21.

Nvidia Soars, Boosting Hopes for Chip Giant TSM

Based on the consensus recommendation from 17 brokerage firms, Taiwan Semiconductor Manufacturing Co Ltd’s (NYSE:TSM) average brokerage recommendation is currently 1.6, indicating a “Outperform” status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.

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This article first appeared on GuruFocus.

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