The stock of Taiwan Semiconductor Manufacturing Co Ltd (TSM) surged to an all-time high powered by a significant price target raise for chip designer NVIDIA Corp (NVDA) by Morgan Stanley.
The monumental spike was catalyzed by Morgan Stanley’s upward adjustment of Nvidia’s price target to $750 from $603 on Feb. 7. This upswing can be attributed to the ongoing surge in demand for AI.
TSMC’s shares opened at NT$709 and closed at NT$697, reflecting a nearly 8% surge from the previous close on Feb. 5. This jump follows the resumption of trading on the Taiwan Stock Exchange after the Chinese New Year hiatus.
TSMC is a global leader in advanced processors and a vital supplier for both Nvidia and Apple.
Nvidia, a major player in the AI sector, is poised to substantially benefit from the AI boom that commenced in 2022. The heightened interest in generative AI, ignited by the launch of OpenAI’s ChatGPT, has driven the demand for Nvidia’s GPUs.
“B100 transition an important near term driver, impacting H100 lead times and competitive dynamics,” wrote Morgan Stanley analysts in the Feb. 7 report to clients, indicating their anticipation that Nvidia’s B100 GPU will revolutionize the AI landscape, surpassing the power of its H100 AI processor.
TSMC is currently producing 3-nanometer chips and aims to commence mass production of 2-nanometer chips by 2025.
TSMC’s shares have been on an upward trajectory, driven by a series of strategic moves. The company is expanding its chip production beyond Taiwan and has plans to construct a second factory in Japan. This new facility, slated to be operational by the end of 2027, will manufacture 6-nanometer chips, marking the most advanced semiconductors produced in Japan.
This development is expected to enhance Japan’s domestic semiconductor production capabilities and aligns with Japanese Prime Minister Fumio Kishida’s efforts to boost the country’s tech industry.
Analysts have also expressed optimism about TSMC’s future, with Needham analyst Charles Shi believing that TSMC is well-positioned to absorb excess capacity and rebalance supply and demand by the end of 2024, setting the stage for significant improvements in 2025.
Photo by Sundry Photography on Shutterstock
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