4. Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM)
Number of Hedge Fund Investors: 156
J.P. Morgan recently kept an Overweight rating on Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) and set a price target of NT$1,200, citing strong sales in August that suggest the company may exceed its third-quarter guidance. Analysts noted that August revenues grew about 33% year-over-year to NT$250.87 billion, representing 68% of J.P. Morgan’s estimates for Q3 2024.
The firm expects September revenues to remain stable or see slight month-over-month growth, driven by increased demand for iPhone processors and robust interest in TSMC’s 3nm (N3) and 5nm (N5) process technologies. While there are reports about Intel potentially outsourcing more products to Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), the analysts believe that the overall revenue impact may be limited since Intel is still focused on developing its 18A and 14A processes.
Looking ahead, J.P. Morgan forecasts that TSMC’s revenues could exceed the high end of its guidance for Q3 due to sustained demand from AI accelerators and high-performance computing products. They anticipate a 10% quarter-over-quarter growth in Q4, fueled by ongoing iPhone demand and new Android system-on-chip (SoC) launches from Qualcomm and MediaTek. Overall, they expect upward revisions to Street consensus over the next year due to improved revenue momentum and higher gross margins from price increases and better yields.
Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is one of the best AI semiconductor stocks big tech funds are piling into, and for the right reasons. Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is the biggest foundry that makes chips for fabless companies, enjoying an over 50% market share. Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is behind some of the world’s most advanced chips, including 2nm and 3nm nodes. It supplies chips to major players like Apple (AAPL), Qualcomm (QCOM), and Nvidia (NVDA).
Despite these growth catalysts, analysts believe Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) valuation is depressed amid the Taiwan factor — any conflict between China and Taiwan would hamper Taiwan Semiconductor Mfg. Co. Ltd.’s (NYSE:TSM) business due to its huge reliance on international supply chains. But some believe these concerns are overblown and there are no short-term risks to Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) from this perspective. Bank of America’s Brad Lin recently increased his earnings estimate and price target for the stock, saying TSMC is the “key beneficiary and enabler of AI prosperity.” Lin set a $180 price target on TSMC.
Ave Maria World Equity Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2024 investor letter:
“Top contributors to performance included SharkNinja, Inc. and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). Taiwan Semiconductor Manufacturing Company Limited is the global leader in semiconductor foundry services, with a dominant market share position in advanced semiconductors. The company has significant pricing power and stands to benefit from secular “megatrends” (5G, high performance computing, AI, rising silicon content per device, etc.) due to its technological leadership.”
