Friday, July 12, 2024

TSMC Shares Soar to Record on Expectations of Tight 2025 Supply


(Bloomberg) — Taiwan Semiconductor Manufacturing Co. rose to a record intraday high in Taipei after Morgan Stanley joined a list of brokers boosting price targets on the chipmaker before its earnings.

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TSMC’s shares jumped as much as 4.5% in Taipei, extending its rally this year to more than 75%. Morgan Stanley raised its target on the stock by about 9%, expecting the chip maker to raise its full-year sales estimate in the earnings announcement next week. The broker also sees TSMC hiking wafer prices due to its strong bargaining power.

“TSMC’s ‘hunger marketing’ strategy seems to be working,” Morgan Stanley analysts including Charlie Chan wrote in a note Sunday. “Our latest supply chain checks indicate that TSMC is delivering a message that leading-edge foundry supply could be tight in 2025 and customers may not get sufficient capacity allocation without appreciating TSMC’s value.”

JPMorgan analysts including Gokul Hariharan also anticipate the company will raise its revenue guidance in the earnings call.

“We expect TSMC to sound more constructive on AI accelerator demand,” he wrote in a note Sunday.

Morgan Stanley and JPMorgan joined brokers including Nomura Holdings Inc. and Mizuho Securities Co. in expressing optimism over TSMC leading into its second-quarter results. The maker of the world’s most advanced chips — used by the likes of Apple Inc. and Nvdia Corp. — is expected to report 36% revenue growth from a year earlier, the fastest pace since the last quarter of 2022, according to data compiled by Bloomberg.

The earnings optimism pushed the company’s Taipei shares past NT$1,000 (about $31) last week. Its market value based on the American depositary receipts recently briefly surpassed Berkshire Hathaway Inc. to become the eighth-largest company globally, and it now has a market cap of over $950 billion.

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