Many have come to believe that artificial intelligence is the next stepping stone to propel the global economy to new heights. However, the giant on whose shoulder stands the development of AI is the semiconductor sector, with its critical supply chains and exponentially growing production capacities. Due to its rapid expansion, this semiconductor stock aims to become the next trillion-dollar company. Today, we will explore these prospects and reveal why you should add this semiconductor stock to your portfolio.
Will semiconductor stocks do well in 2024?
The semiconductor industry was plagued by a number of issues in 2023, culminating in a 9% decline compared to the previous year. Supply chain disruptions, the China-U.S. chip war, and a production shuffle have taken their toll, but the numbers are more optimistic for 2024 as experts forecast a 9-12% recovery driven by strong demand.
Artificial intelligence is booming, and all five Big Tech members invest heavily in large language models and smart technologies, which require high-performance computing chips. Furthermore, the electric vehicles industry also relies on semiconductors, and the growing production and demand, especially in the Asian market, will require ever more chips.
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The semiconductor stock racing for the trillion mark
Right in the center of the budding chips industry is Taiwan Semiconductor Manufacturing Company, or TSMC (NYSE: TSM). With an impressive 61.2% market share in the global semiconductor foundry market, TSMC is central to all high-tech visions of the future any of us have.
With a market share of slightly over $700 billion, TSMC is currently the world’s 10th-largest company by market capitalization and the third company in line to reach $1 trillion. Since Berkshire Hathaway (NYSE: BRK.B) is an investing company and Eli Lilly (NYSE: LLY) comes from the pharmaceutical sector, TSMC is the first semiconductor stock to potentially become the next trillion-dollar company.
Although there are two contenders in front of it, TSMC could be a favorite. First, Berkshire’s market capitalization is largely based on its stock portfolio, the largest component of which is Apple (NASDAQ: AAPL). As Apple is currently struggling, Berkshire is less likely to gain significant market capitalization soon. Second, Eli Lilly is a pharmaceutical company, and that sector is not growing nearly as quickly as the semiconductor sector.
TSMC beating expectations amid surging chip demand
Taiwan Semiconductor Manufacturing Company released its Q1 2024 reports to reaffirm its dominance and beat Wall Street analysts’ expectations.
For example, where the expert consensus forecasted a net revenue of NT$582.94 billion ($17.90 billion), the company delivered NT$592.64 billion ($18.87 billion). This is a net revenue hike of 16.5% compared to last year, while net income rose by 8.9% to reach NT$225.49 billion ($6.92 billion).
TSMC’s co-CEO C.C. Wei stated the company forecasts 2024 to be a year of “healthy” growth, supported by undisputed market leadership and a wide customer base with clients such as Apple and Nvidia (NASDAQ: NVDA).
An especially important segment is energy-efficient computing chips, which fuel the demand by smart technology companies. Virtually all major AI innovators buy from TSMC: in fact, this semiconductor giant estimates its revenue from server AI processors to “more than double” in 2024.
TSMC is currently manufacturing 3-nanometer chips and intends to switch to mass production of 2-nanometer chips by 2025. Decreasing the nanometer size typically results in chips that are more potent and energy-efficient.
About TSMC
Established in 1987, it is headquartered in Hsinchu, Taiwan. TSMC plays an integral role in the global semiconductor industry and remains crucial in virtually all electronic consumer goods production. Most of the company is owned by foreign investors, while the Taiwanese government is its largest shareholder.
TSMC’s chip exports were $184 billion in 2022 and accounted for almost 25% of Taiwan’s GDP. It trades on the Taiwan Stock Exchange (TWSE) and NYSE under the TSM ticker.
TSMC stock price forecast 2025
With surging demand and healthy financials, analysts expect that the TSMC stock price forecast for 2025 will increase. Being a key component in a (re)surging industry, the semiconductor king is poised for growth in the following year.
| Metric | Value |
| TSMC average price target | $164.13 |
| TSMC high forecast | $188.00 |
| TSMC low forecast | $150.00 |
| TSMC change from the last price | 21.63% |
TSMC current stock price
As of May 2, 2024, the TSMC stock price is $134.94, marking a 28.33% increase in year-to-year price.
TSMC has hit all the key industry trends benchmarks, exceeding expectations and surging to reach the trillion market cap mark. If it keeps up with the tempo, this semiconductor stock will become the next trillion-dollar company. The continued demand for cutting-edge chips with artificial intelligence applications remains a positive sign for TSMC in both the long and short runs.
So, all the indicators point to the fact that TSMC is a growth stock with a rising stock price. Whether you should invest in it, however, remains a decision you should make only if it aligns with your general investing objectives. And, of course, remember to do your own research beforehand.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
