Taiwanese chip manufacturer TSMC, alongside Nvidia, is gaining recognition as an AI pioneer due to strong Q3 earnings, supported by rising orders from top customers.
TSMC faces risks due to the US Commerce Department investigation into manufacturing chips for the sanctioned Chinese firm Huawei, breaching US export rules. Our TSMC stock forecast for 2024, 2025, and 2030 analyzes company performance, financial results, and market analyst expectations.
Analysis of TSMC Stock: A Year in Review
Taiwan Semiconductor (TSMC), the second-largest semiconductor stock, has seen its stock surge by 95% year-to-date, a nearly 2X increase in under 12 months, driven by the hottest AI investing trend.
TSMC’s management predicts continued record-setting growth, citing strong demand for its 3nm and 5nm technologies in the third quarter. Factors such as smartphone and AI-related demand influence the company’s stock forecast.
Why Is TSMC Stock Rising?
The rise of artificial intelligence and a broader focus on technology are important, but there are other special reasons why TSMC news is receiving more attention and research these days.
TSMC Earnings
TSMC reported Q3 2024 results, revealing a revenue of NT$760 billion and a net income of NT$325 billion. The company’s earnings per share rose by 54.2% year-on-year, while net income and EPS rose by 54.2%. Q3 revenue reached $23.50 billion, a 36.0% increase from the previous year and a 12.9% rise from the previous quarter.
Morningstar’s Phelix Lee highlights TSMC’s disciplined capital spending strategy in 2024 and the coming years, which reduces oversupply risks and allows for flexibility in research to maintain leadership. This contrasts with the recent layoffs and downsizings in tech sector stocks like Meta and Google.
US Commerce Department Investigation
The Commerce Department is investigating TSMC for potentially violating US export regulations by producing AI or smartphone chips for Huawei. TSMC denied the allegations and informed the department that its chip was found in a Huawei product. TSMC, a dominant supplier of chips for US corporations like Apple, is uncertain about the regulatory steps against the firm due to potential damage to national players’ interests.
TSMC’s Geopolitical Risk
TSMC stock forecasts are influenced by geopolitical concerns, with the risk of war between Taiwan and China remaining high despite US support. The risk is unavoidable, as management plans to trigger self-destruct sequences in case of invasion.
However, the management of TSMC is taking proactive steps to stop (or at least lessen) the harm that has been done. TSMC is steadily growing its current presence by adding production plants in the US, Germany, and Japan that are either already in operation or under construction.
Strategic Partnerships
TSMC’s bundled client list and cutting-edge offerings protect its stock price from disruption risk in hard tech industries like chipmaking. These offerings typically sell within multi-year contracts, ensuring quality revenue forecasts.
TSMC, a leading AI, computing, and automotive industry company, has partnered with major companies like Apple, Qualcomm, Nvidia, and AMD, justifying significant investments in new process nodes by securing detailed roadmaps from customers.
Current Forecasts for TSMC Stock in 2024, 2025, and 2030
TSMC stock prediction for 2025 suggests a strong buy, with predictions ranging from $150 to $250. A moderate buy is rated by five Wall Street analysts, with four having buy recommendations and one seeing it as a ‘hold.’ The broad consensus is $205. However, the TSM stock is rated slightly less optimistic, with one analyst seeing it as a ‘hold.’
WalletInvestor’s TSMC stock forecast for 2025 predicts strong performance and a potential value of $215.59 in one year. However, analysts are hesitant to look too far into the future, making a 2030 stock price prediction unrealistic. CoinPriceForecast’s prediction is $718 by the end of 2030, but analysts’ and algorithm-based projections may be wrong.
In conclusion, is it wise for me to invest in TSMC?
High-quality semiconductor stocks like Nvidia and TSMC are excellent choices if you’re optimistic about AI’s long-term prospects but want to invest in a variety of tech applications because their revenue streams sufficiently diversify to mitigate sector-specific risk. However, investors also take on the significant geopolitical risk that is reflected when TSMC mitigates a risk.
