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.
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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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