TSMC Briefly Surpasses $1 Trillion Market Cap Amid Surge in AI Demand

Taiwan Semiconductor Manufacturing Co. (TSMC) briefly eclipsed the $1 trillion market capitalization milestone on Monday as its American Depositary Receipts (ADRs) surged by up to 4.8% at the opening bell in New York. This year alone, TSMC’s shares have risen over 80%, underscoring the robust investor confidence in the semiconductor giant’s future prospects.

The significant rise follows Morgan Stanley’s decision to raise its price target on TSMC by about 9%, anticipating a favorable earnings announcement next week. The brokerage expects TSMC to adjust its full-year sales estimates upward and possibly increase wafer prices due to its strong bargaining power.

“TSMC’s ‘hunger marketing’ strategy seems to be working,” Morgan Stanley analysts, including Charlie Chan, noted. The analysts highlighted TSMC’s signal that leading-edge foundry supply might be tight in 2025, suggesting customers may need to acknowledge TSMC’s value to secure sufficient capacity.

JPMorgan analysts, led by Gokul Hariharan, echoed this optimism, predicting an upbeat tone from TSMC regarding AI accelerator demand in the upcoming earnings call. The bullish sentiment is shared by other major brokers, including Nomura Holdings and Mizuho Securities, ahead of TSMC’s second-quarter results.

TSMC’s ADRs, trading at a premium compared to its Taipei-listed shares, have benefitted from easier accessibility for foreign investors and the ability to be fungible, unlike the Taiwan shares that require special regulatory approval for conversion to the US equivalent. This advantage has contributed to the ADRs’ outperformance.

The Taiwanese chipmaker’s strategic position as the exclusive supplier of critical components for tech giants like Apple Inc. and Nvidia Corp., whose market caps exceed $3 trillion, has made it a favored choice among global investors keen on AI advancements. Despite geopolitical concerns, such as rising tensions in the Taiwan Strait, Wall Street’s confidence in TSMC remains unshaken, driven by surging AI-related demand and expected price increases in 2025.

Monday’s rally also underscores TSMC’s significant achievements, surpassing Berkshire Hathaway Inc. in June to become the world’s eighth most valuable company. As reported by Bloomberg, the maker of the world’s most advanced chips gears up for its earnings announcement, expectations are high, with anticipated 36% revenue growth year-over-year, the fastest since late 2022.

The spotlight on TSMC continues, as investors look forward to its strategic moves in an increasingly AI-driven market, reinforcing its critical role in the global tech ecosystem.