NVIDIA (NASDAQ:NVDA) just became the most valuable company in the U.S., with a market capitalization of $3.34 trillion. However, it is not the only chip play in town. Another major semiconductor name experiencing a rally of its own is Taiwan Semiconductor(NYSE:TSM). It doesn’t hurt either that NVIDIA is one of TSM’s top customers.
Why Taiwan Semi Is Important
Taiwan Semi’s importance in the current semiconductor value chain is unparalleled. Top tech names such as NVIDIA, Apple (NASDAQ:AAPL), AMD (NASDAQ:AMD), and Qualcomm (NASDAQ:QCOM) are TSM’s customers. Additionally, the current demand scenario in the age of AI promises to boost TSM’s fortunes. Earlier this month, TSM reported a 30% surge in its top line for May.
Moreover, a potential tech product replacement cycle, as AI makes inroads into everything from laptops to smartphones, could be another long-term driver for the company.
The Street’s Views on TSM
Not surprisingly, Taiwan Semi’s share price is up nearly 75% over the past year, and analysts continue to view the stock favorably. This week, Susquehanna’s Mehdi Hosseini, a five-star rated analyst on TipRanks, reiterated a Buy rating on TSM while increasing the target price from $180 to $200. The analyst favors TSM due to its robust customer and product diversification. Bank of America Securities’ Brad Lin also remains upbeat about TSM’s prospects.
Is TSM a Buy, Sell, or Hold?
Overall, the Street has a Strong Buy consensus rating on the stock, alongside an average TSM price target of $170.33. At the same time, a price-to-earnings multiple of 33.7 means TSM shares aren’t exactly cheap at current levels.
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