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On Tuesday, BofA Securities maintained a bullish stance on Taiwan Semiconductor Manufacturing Company (NYSE:TSM), reiterating both a Buy rating and a $265.00 price target for the stock. Currently trading at $169.49, TSM shows potential upside according to analyst consensus, with targets ranging from $180 to $273. InvestingPro analysis indicates the stock is currently undervalued based on its proprietary Fair Value model. The endorsement comes as TSMC has declared plans to invest an additional $100 billion, a move that has generated a range of investor reactions, particularly concerning gross profit margin (GPM) prospects, intellectual property (IP) protection, and expansion strategies. The company maintains a robust gross profit margin of 56.12% and has demonstrated strong revenue growth of 33.89% over the last twelve months.
Brad Lin, an analyst at BofA Securities, addressed several key investor inquiries in his report. These included questions about TSMC’s regional capacity mix, GPM, IP leakage concerns, capacity planning, the potential for overcapacity, and the company’s position relative to Intel. Lin also offered a preview for the first quarter of 2025 and initial estimates for the second quarter, noting adjustments to the 2025/26 earnings estimates to account for the recent earthquake’s impact and uncertainties surrounding artificial intelligence (AI) developments. TSMC maintains excellent financial health with an InvestingPro Overall Score of 3.21/5, particularly excelling in profitability metrics with a score of 4.3/5.
Despite these concerns, BofA Securities reaffirmed their positive outlook on TSMC, expecting the company to provide further details and insights during the upcoming BofA TMT conference scheduled to take place in Taiwan from March 17-21. The firm’s continued confidence in TSMC underscores its position as a leading player in the semiconductor industry, even as it navigates challenges and investor scrutiny. For comprehensive analysis including detailed financial metrics and expert insights, access the full TSM InvestingPro Research Report, part of our coverage of 1,400+ top US stocks.
In other recent news, Taiwan Semiconductor Manufacturing Company (TSMC) reported a decline in February revenue by 11% month-over-month, yet a substantial increase of 43% year-over-year, totaling NT$260 billion. Bernstein maintained an Outperform rating for TSMC with a $251 price target, noting strong sales figures despite disruptions, such as a January earthquake. TSMC’s first-quarter revenue for 2025 is anticipated to be on the lower end of its guidance, though it may still exceed market expectations. In a related development, JPMorgan reiterated its Overweight rating and a TWD1,500 price target for TSMC, following the company’s announcement of a $100 billion investment in the United States. This strategic move includes the construction of new fabrication plants and aims to mitigate risks related to tariffs and potential involvement in an Intel rescue plan.
Meanwhile, Northland maintained an Outperform rating on Intel Corporation (NASDAQ:INTC) with a $28 price target, amidst speculation of potential acquisitions involving Broadcom (NASDAQ:AVGO) or TSMC. The firm highlighted Intel’s challenges in keeping pace with industry innovations, noting that Intel lags behind TSMC in semiconductor manufacturing technology. Additionally, Bernstein analysts commented on the Trump administration’s proposals to support TSMC and Intel, including the possibility of TSMC building a U.S.-based packaging plant. The proposal also suggests potential collaborations between TSMC and Intel, with varying levels of feasibility and economic implications.
Lastly, the European Commission announced the InvestAI initiative, aiming to mobilize €200 billion for AI development in Europe. This includes the creation of AI gigafactories to establish Europe as a leading hub for AI innovation. The initiative is designed to foster open, collaborative development and is expected to significantly boost the European AI sector.
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