TSMC hits record high amid AI boom, joins trillion-dollar club

TSMC in Trillion Club: Taiwan Semiconductor Manufacturing Company (TSMC) reached a record peak on Thursday, reporting strong second-quarter revenue driven by soaring demand for AI applications. This milestone cements TSMC's status as Asia's most valuable company and marks its entry into the trillion-dollar market value club.

AI-driven market surge

The AI frenzy has ignited a rally in chipmaker stocks globally, with TSMC, the world's largest contract chipmaker, at the forefront. Serving high-profile clients like Nvidia and Apple, TSMC has significantly benefited from the increased demand for AI-capable chips. Foreign investors have invested $4.8 billion into Taiwan's stock market, dominated by TSMC, this year. Despite this influx, HSBC reports that Asian funds remain underweight in Taiwan, indicating potential for further investment.

A stellar performance by the numbers

TSMC's shares have surged nearly 80 per cent this year, far outpacing the Taiwan SE Weighted Index, which has risen 35 per cent. On Thursday, TSMC's shares in Taipei climbed over 2 per cent to a record T$1,080, boosting its market value to T$28 trillion ($861 billion), making it Asia's most valuable publicly listed company. Additionally, TSMC's American Depositary Receipts (ADRs) on the NYSE hit a record $192.79 on Monday, briefly pushing the company’s market value to $1 trillion. The ADRs closed at $191.05 on Wednesday. TSMC is scheduled to report its full second-quarter earnings on July 18.

This year has been favourable for AI-focused companies, particularly chipmakers, which saw significant market capitalisation gains in June. Nvidia briefly surpassed Microsoft to become the world's most valuable company. Nvidia, Microsoft, and Apple all currently have market values exceeding $3 trillion. TSMC's strong performance has positively influenced global chip stocks, with the Philadelphia semiconductor index rising 2.4 per cent to a record on Wednesday.

Expert Insights

"Optimism continues to grow around AI-related demand and potential pricing powers, as TSMC's position as leading foundry supplier should elevate earnings in 2025," said Daniel Tan, portfolio manager at Grasshopper Asset Management in Singapore. He added, "In an industry facing increasingly tight supply, TSMC's value is expected to appreciate further as customers bid for sufficient capacity allocation."

TSMC's remarkable performance signifies the transformative impact of AI on the semiconductor industry, positioning the company for sustained growth and heightened market value. As AI technology continues to advance, TSMC is well-positioned to capitalise on the increasing demand for cutting-edge chips.

With Reuters Inputs