Taiwan Semiconductor Manufacturing (NYSE: TSM) recently received another price target hike from Bernstein Research. The investment firm maintained an “outperform” rating and set a new price target of $150 from $125 previously. With TSMC’s stock price at $139.44, that new target represents a 7.6% jump over the next 12 to 18 months.
TSMC is back in growth mode in 2024
One reason for the upgrade comes from the belief that Intel outsourcing some of its production to TSMC, as it is better known, is helping the latter grow stronger over the next couple of years. While Intel may move some production in-house in a few years, the near-term impact is a plus for TSMC.
2024 is a year of recovery for the company, as its high-performance computing (HPC) chips benefit from the boom in artificial intelligence (AI) applications. This is proving a boon and helping replace slowing smartphone demand. A lot of news in recent months, including TSMC’s monthly sales data and industry data, points to a strong year of growth for the company.
Where next for TSMC
While Bernstein believes TSMC can beat market expectations in 2024 and 2025 (partly on the back of Intel outsourcing), its 2026 earnings target is in line with the market due to an expectation that Intel’s outsourcing won’t be so aggressive in 2026.
That remains to be seen, and it’s tough to predict the semiconductor market over the next six months, let alone a few years. Still, TSMC’s technological lead stands it in good stead for long-term growth, and for now, the stock looks like a good momentum play in 2024.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
Is Taiwan Semiconductor Going to $150? 1 Wall Street Analyst Thinks So was originally published by The Motley Fool
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