Breaking News: TSMC Primed for Rapid Growth as AI Boom Continues
In a recent report, Bernstein analysts have declared that Taiwan Semiconductor Manufacturing (TSMC), the leading chip manufacturer in the world and a key player in the current AI boom, is poised for rapid growth. According to the investment firm, TSMC is expected to see a 26% increase in revenue and a 29% rise in earnings per share (EPS) this year, with this momentum carrying on into 2025 and beyond.
The surge in demand for data center AI and high-end smartphones utilizing TSMC's advanced N3 and N4/5 nodes has been a major driver of this growth. Bernstein highlights that TSMC's capacity for these nodes is fully utilized and will remain so well into 2025, contributing to a 30% revenue growth in Taiwan dollars for the year.
Looking ahead, Bernstein projects continued rapid growth for TSMC in 2025 and 2026, with EPS expected to rise by 30% and 19%, respectively. The expansion in data center AI demand and Intel's increasing reliance on TSMC for outsourcing are expected to fuel this growth. Additionally, TSMC's N3 and N4/5 nodes are set to see a price increase of 5-10% in early 2025, further boosting revenue.
Despite potential headwinds like Intel reducing outsourcing, Bernstein believes that AMD and Arm-based CPUs from Qualcomm and MediaTek will continue to leverage TSMC's superior technology, offsetting any negative impacts. AMD's early adoption of N2 technology is also expected to enhance performance with less margin drag than N3.
In conclusion, Bernstein maintains an Outperform rating on TSMC, emphasizing that the stock's valuation remains attractive, especially in the event of a recession. The firm holds a price target of NT$1,185 on TSMC shares, reflecting a 24% upside, including a 2% dividend yield.
In summary, TSMC is well-positioned for significant growth in the coming years, driven by strong demand for its advanced nodes and services in the AI and smartphone markets. Investors can expect impressive revenue and EPS growth, making TSMC a promising investment opportunity for the future.