2024-07-01 07:11:18 ET
Summary
- TSMC is poised to capture a significant share of AI-driven value accumulation within the semiconductor industry, a trend that should extend for a few years.
- As the world's leading foundry service provider, TSMC is benefiting from a multi-year shift towards increased semiconductor content in mobile devices and cloud centers.
- TSMC's AI revenues are expected to increase from less than $5 billion in 2021 to over $30 billion by 2027.
- Overall, I expect TSMC's revenue growth over the next three years to exceed a 20% CAGR, with a slightly higher expansion rate for EPS due to potential margin improvements.
- Based on a valuation anchored on a residual earnings model, I maintain a "Buy" rating on TSMC stock, and set my target price at $200.
Taiwan Semiconductor Manufacturing Company (TSM) is strategically positioned to capture a lion share of the AI-driven value accumulation within the semiconductor industry. The world's leading foundry service company is benefiting from the multi-year shift towards increased semiconductor content in mobile devices, the rise of artificial intelligence, and the further proliferation of the Internet of Things. Furthermore, TSMC's strategic alliances with key growth customers such as NVIDIA and Apple amplify its market position and commercial moat. Overall, I expect TSMC's revenue growth over the next 3 years to be above 20% CAGR, with a slightly higher expansion rate for EPS due to potential margin expansion. As a function of valuation anchored on a residual earnings model, I maintain a "Buy" rating on TSM stock, and set my target price at $200....
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TSMC: Strategic Alliances Lift Stock To New All-Time Highs