There are big companies trading on Wall Street that don’t generate the same hype as others who have less to show for. I believe TSMC (TSM), the largest semiconductor manufacturer from Taiwan, is a prime example. It doesn’t come with the same flare as Tesla (TSLA), the excitement of Apple (AAPL), or the fanfare of Nvidia (NVDA), but it is very much crucial to the tech industry, even more so than Tesla or Apple. Just imagine what would happen to the tech industry if TSMC disappeared suddenly. It would probably stagnate the industry or freeze it entirely for a while, at least.
Even Warren Buffet described the company as, “One of the best-managed companies in the world… and nobody in the chip industry is in their league.” So, who’s going to argue with the “Oracle of Omaha?” In the meantime, the company is doing what it has done in years past, increasing its revenue, margins, and all that jazz.
Our writer at Tipranks, Omer Farooq, has written about it more in-depth, and you can read it right here. For now, let’s explore three reasons why TMSC deserves investors’ full attention.
- TSMC’s Stock Surge: TSMC’s stock has soared nearly 77% year-to-date, driven by the increasing demand for Nvidia’s products. Let’s not forget that AMD (AMD) and Apple (AAPL) also outsource their chip manufacturing to TSM, making it an invaluable player that some of the most dominant companies rely upon in the semiconductor industry. This brings us to the second point.
- Dominance in the Foundry Market: With a 62% share of the global foundry market for the last seven quarters, TSMC’s dominance is undeniable. To put it mildly, TSM has solidified its position at the focal point of an industry projected to be worth over $172 billion by 2032, according to Credence Research.
- Promising Growth Prospects and Appealing Valuation: Over the past decade, TSMC has showcased increased revenue growth and technology, and that’s not about to stop, as other growing industries like autonomous cars, the Telehealth industry, and drug research will need and use the TSM chips. The company’s investments in advanced process nodes, such as 3nm and 2nm, further solidify its position as the most dominant force in the semiconductor realm. Also worth noting is its forward P/E of 20, which is only slightly above the semiconductor industry of 19.1. This means that the stock is relatively cheap, considering its potential future trajectory.
What Is the Target Price for TSM Stock?
On Wall Street, the stock is considered a Strong Buy, with 5 Buys, 0 Holds, and 0 Sells. The average price target for TSM stock is $205, signaling a 10.19% upside. Also, TSM stock offers a modest dividend yield of around 1%.
Conclusion
To be as straightforward as possible, TSMC, as of now, looks like one of the safest investments on Wall Street when considering its leading position in the semiconductor industry and its dependency on some of the major players in the tech world. It doesn’t create the same hype as other companies, but hype comes and goes, while the Taiwan-based company has been mastering its craft since 1987.
