Taiwanese Chip Maker Achieves Trillion Dollar Valuation Due to AI

Taiwanese Chip Maker Achieves Trillion Dollar Valuation Due to AI

Wall Street is buzzing with excitement over the ascent of artificial intelligence (AI), and Taiwan Semiconductor Manufacturing Company (TSMC) has captured the spotlight. This semiconductor giant recently reached a significant milestone – joining the select group of companies valued at over $1 trillion in market capitalization.

This achievement places TSMC among the world’s most valuable technology companies and highlights the increasing importance of the semiconductor industry. Briefly, TSMC’s market valuation even exceeded Tesla’s, elevating it to the seventh position among global technology giants.

The company’s stock has seen an outstanding rise, consistently trading above its 50-day average of $158 and hitting a new annual peak of $192.80. Year-to-date, TSMC shares have soared by an impressive 80%.

The semiconductor industry has become the most dynamic sector in technology, driven by the increasing demand for robust chips in artificial intelligence (AI). Global sales of these chips are projected to reach a record $611.2 billion in 2024, marking a 16% increase this year and an additional 12.5% next year. This growth is primarily fueled by advancements in “generative AI,” a type of AI that requires high-performance chips.

Ahead of its upcoming earnings report, analysts are increasing their price targets for chipmaker TSMC, with some, such as Morgan Stanley, forecasting higher sales for the year. TSMC’s strategy of maintaining tight supply – referred to by some as “hunger marketing” – indicates that the company’s chips will continue to be highly sought after in 2025, enhancing their negotiating leverage. The escalating chip prices, driven by AI, further bolster TSMC’s position.

For investors, the crucial factors are TSMC’s revenue growth, profitability, and its valuation relative to other chip companies.