Taiwan Semiconductor Manufacturing Company (NYSE:TSM), popularly known as TSMC, is the world’s largest contract chipmaker. Though TSMC has been under pressure due to a decline in end market demand, a number of recent events have kept it in the news. The likelihood of a deal with Microsoft (NASDAQ:MSFT), the rise of AI (Artificial Intelligence), the commencement of the process to apply for incentives under the CHIPS and Science Act, and its hiring plans could all boost the stock price.
Notably, the rise of AI, thanks to the popularity of OpenAI’s ChatGPT, and the ongoing investments by large tech companies to develop and deploy AI strategies will likely support the growth of this largest semiconductor foundry in the world. Meanwhile, DIGITIMES reported that Microsoft approached TSMC to use its CoWoS (Chip-on-Wafer-on-Substrate – used for high-performance computing) for its own AI chip.
While the buzz around AI is positive, TSMC plans on hiring 6,000 employees this year. Moreover, the company is investing about $40 billion to construct semiconductor fabrication plants in Arizona and will likely benefit from the government’s incentives under the CHIPS and Science Act.
TSMC has good growth prospects in the long term, but the ongoing sector-wide headwinds could limit the upside in its stock. Let’s look at what Street recommends for TSMC.
What is the Prediction for TSM Stock?
TSM stock has three Buy recommendations, translating into a Strong Buy consensus rating. Meanwhile, the average price target of $104.33 suggests 16.19% upside potential.
While Wall Street is bullish about TSM stock, hedge funds sold a whopping 56.5M shares of TSM last quarter. Overall, the stock has a Neutral Smart Score of seven.
