Shares of Taiwan Semiconductor Manufacturing Co. (NYSE: TSM) posted gains on Tuesday, extending a positive trend that began in the previous week. The rally followed the U.S. Commerce Department's approval of a one-year export license, enabling Taiwan Semiconductor to continue importing U.S.-made chipmaking equipment for use at its Nanjing facility in China. This license eliminates the need for individual approvals for each shipment of American-controlled tools, easing operations for the company’s Chinese manufacturing site.
This regulatory development has played an important role in boosting the stock’s outlook, providing certainty regarding the continuity of U.S. equipment supplies crucial for Taiwan Semiconductor’s China operations.
Further adding to the enthusiasm among investors, Goldman Sachs analysts led by Bruce Lu revised their price target upward by approximately 35%, pegging the new target at 2,330 New Taiwanese dollars. The analysts identified artificial intelligence (AI) as a transformative, multi-year growth catalyst for Taiwan Semiconductor, highlighting the company’s earnings potential amid the expanding AI chip market. Their positive view was reinforced by improved profit margins, even as the firm plans to invest significantly in capacity expansion. Indeed, Taiwan Semiconductor intends to allocate around $150 billion over the next three years to scale its manufacturing capabilities.
The surge in investor interest also coincides with a robust AI chip demand environment. On Friday, Taiwan Semiconductor’s American Depositary Receipts (ADRs) jumped 5.17%, boosting the company’s market capitalization to an estimated $1.66 trillion. This valuation exceeds that of notable technology companies such as Meta Platforms Inc. (NASDAQ: META) and Broadcom Inc. (NASDAQ: AVGO). Over the past twelve months, the stock has risen by more than 52%, elevating Taiwan Semiconductor to the position of the sixth-largest company globally by market capitalization.
Meanwhile, Nvidia, a key player in AI chips, continues to strengthen its collaboration with Taiwan Semiconductor amid escalating demand for AI processing components. Nvidia’s CEO Jensen Huang is anticipated to visit Taiwan in the current month to engage with both governmental officials and business partners. This visit could also include announcements about establishing a new headquarters in Taipei. Nvidia’s expansion plans in Taiwan particularly focus on increasing chip production capacity in partnership with Taiwan Semiconductor, aiming to address the intensifying demand, especially from the Chinese market.
Reflecting the heightened optimism, Taiwan Semiconductor’s shares were trading at $328.97 in premarket activity on Tuesday, rising 2.09%. This price is approaching the company’s 52-week high of $331.25, indicating sustained investor confidence. These figures were reflected in financial data sourced from Benzinga Pro.