Taiwan Semiconductor Manufacturing Company (NYSE:TSM) has been on a tear over the past two months, following a post-Liberation Day nosedive. Indeed, TSM’s share price has risen by roughly 50%, bullied by hard-charging capex spending plans by the hyperscalers.
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The proof, as the saying goes, is in the pudding, and TSM’s sales figures for May surged by some 40% year-over-year – a crystal clear indication that spending is strong.
But does that mean that TSM is a good investment right now, or have investors missed the boat? One top investor known by the pseudonym KM Capital sees plenty of dollar signs up ahead.
“Major cloud and AI infrastructure investments by Amazon, Google, and Meta reinforce TSM’s dominant position and long-term growth prospects,” shares the 5-star investor, who is among the top 3% of TipRanks’ stock pros.
The investor further details that Amazon has been “aggressive” with its spending announcements regarding new data centers in both the U.S. and Australia, Google just bought 85 acres in Ohio (which could house a major AI infrastructure project), while Meta is pursuing a 150MW geothermal project in New Mexico – a sign of large data center projects on the horizon.
Moreover, there is plenty of real-world AI potential that should continue driving sales, such as the advent of robotaxi and humanoid androids. The investor points to one report which predicts that humanoid robots could become a $5 trillion industry by 2050.
Much of this future business will be funnelled toward TSM since Intel is far away from challenging TSM, giving the company quite a substantial moat over the competition, reminds the investor.
KM’s discounted cash flow model suggests that TSM’s fair value is $292, suggesting a healthy upside and “making TSM a no-brainer investment opportunity.”
While risks remain, such as geopolitical tensions, trade dustups, and a reliance on a relatively concentrated crew of hyperscalers, KM urges investors to look beyond these potential pitfalls.
“I think that TSM’s rock-solid fundamentals coupled with compelling valuation far outweigh all the risks and uncertainties,” concludes KM Capital, who gives TSM a Strong Buy rating. (To watch KM Capital’s track record, click here)
That’s the overwhelming spirit on Wall Street as well. With 7 Buys and 1 Hold rating, TSM enjoys a Strong Buy consensus rating. That being said, its 12-month average price target of $223.71 has only minimal upside in the coming year. (See TSMC stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.