TSMC’s Market Surge: Overtaking Tech Titans on AI Demand

The financial markets are witnessing a historic shift in corporate valuations. Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading contract chipmaker, has now surpassed both Meta and Broadcom in market capitalization. This milestone positions the Taiwanese foundry as the sixth most valuable publicly traded company globally. The driving force behind this ascent is an insatiable demand for semiconductors that power artificial intelligence applications, prompting analysts like those at Goldman Sachs to project significant further potential. Investors, however, are beginning to scrutinize whether current valuations still offer room for growth.

Operational Momentum and Technological Leadership

Fundamental operational progress provides a solid foundation for the stock’s performance. TSMC has officially commenced high-volume manufacturing of its next-generation 2-nanometer process technology. This achievement makes it the first foundry worldwide to mass-produce chips at this scale using advanced Gate-All-Around (GAA) transistors. Reports indicating better-than-anticipated production yields bolster the analyst consensus that TSMC can expand its profit margins further. This technological lead acts as a formidable competitive barrier, cementing the company’s role as the foundational backbone of the ongoing AI revolution.

The company’s operational dynamics are reflected directly in its valuation. TSMC’s market capitalization has climbed to approximately $1.657 trillion. Its American Depositary Receipts (ADRs), traded on the New York Stock Exchange, closed at a record high of $319.61 on Friday.

Unabated AI Demand Fuels the Rally

The relentless expansion in artificial intelligence continues to be the primary catalyst for TSMC’s rally. As the principal manufacturing partner for the industry’s largest players, the company benefits directly from aggressive orders placed by its key clients. Notably, reports suggest that Nvidia has significantly ramped up production of its H200 AI chips to meet market needs, with TSMC fulfilling these orders.

Should investors sell immediately? Or is it worth buying TSMC?

Analyst Confidence and Raised Targets

In response to these developments, the investment bank Goldman Sachs has substantially increased its price target for TSMC shares listed in Taipei. The target was raised from NT$1,720 to NT$2,330, with the bank maintaining its “Conviction Buy” rating. Their analysts anticipate that production capacity for AI-related chips will remain tight through 2027. Despite planned capital expenditures exceeding $150 billion between 2026 and 2028, the firm’s researchers still expect TSMC to maintain gross margins above 60%. They cite potential price increases and ongoing productivity improvements as key factors supporting this robust profitability outlook.

Geopolitical Clarity Provides Relief

Beyond operational successes, geopolitical developments have also offered reassurance to the market. The United States government has granted TSMC a one-year license to import chipmaking equipment into its fabrication facility located in Nanjing, China. This authorization removes a near-term uncertainty and helps secure production capacity in a critical regional market.

Market participants are now turning their attention to January 15. On this date, TSMC is scheduled to release its next quarterly earnings report and provide its financial outlook for the coming year. Given the elevated expectations following the recent share price appreciation, the management’s ability to confirm the optimistic projections of analysts will be crucial for the stock’s near-term trajectory.