Just over a year ago, a company almost unknown to the general public managed to reach the trillion-dollar mark in market capitalization. Its dominance in AI development as a chip manufacturer catapulted it to stardom during the generative AI boom. Since then, Nvidia has broken record after record, recently surpassing three trillion dollars in market value, thanks to a nearly vertical rise in its stock, which has climbed 170% so far this year.

In its wake, many other companies have benefited from investor euphoria over AI. One of them, Taiwan Semiconductor Manufacturing Company (TSMC), is now knocking on the trillion-dollar club's door. This chip manufacturer is listed on the Taiwan Stock Exchange but is also present on Wall Street through American Depositary Receipts (ADRs), which represent ownership of non-U.S. shares. Its market capitalization is close to 950 billion dollars after a 75% revaluation so far this year and 146% since the beginning of 2023.

 

TSMC's Growth

If nothing changes, TSMC will become the seventh most valuable company in the world in the coming days, surpassed only by tech giants like Microsoft, Nvidia, Apple, Amazon, Meta, and the Saudi oil company Aramco. In its climb, TSMC has overtaken Warren Buffett's investment vehicle, Berkshire Hathaway, which is close to 900 billion in market value.

The consensus among analysts is that TSMC will report a 36% revenue growth in its second fiscal quarter, to be announced on July 18, marking the largest sales increase since the last quarter of 2022. This growth, if realized, will be accompanied by an expected rise in semiconductor demand in the coming quarters. The firms that follow the stock show almost total confidence in its numbers. 95% of experts surveyed by Bloomberg recommend buying TSMC shares, although they believe its upside potential is exhausted.

Morgan Stanley recently raised its target price and reiterated its overweight rating, highlighting that TSMC is one of the long-term winners in the AI boom. Citi analysts also increased their target price by 12%, driven by a surge in demand for its most advanced processors. For the next two years, Citi forecasts a revenue increase of between 31% and 39%, adding to the 29% rise expected this year.

Beyond its stock market performance, TSMC's weight in the global semiconductor industry is very high. According to Mirabaud, Taiwan manufactures most of the world's advanced semiconductors and many next-generation ones. Among its biggest clients are giants like Apple, Nvidia, Broadcom, AMD, Texas Instruments, Intel, and Qualcomm. This has raised some alarm among analysts when diplomatic relations between China and Taiwan have deteriorated, as a potential conflict between the two countries would have a significant impact on the global technology sector. With a 60% market share, TSMC is 13 points ahead of its main competitor, Samsung.