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On Wednesday, Daiwa Securities shifted its stance on TSMC (2330:TT) (NYSE:TSM), elevating the semiconductor giant’s stock rating from Outperform to Buy, albeit with a slight reduction in the price target from TWD1,250.00 to TWD1,200.00. Rick Hsu, an analyst at Daiwa, provided insights into the decision, citing an analysis of tariff impacts and market reactions. The upgrade aligns with the broader analyst consensus, as revealed by InvestingPro data showing a strong buy recommendation of 1.33, with the $690 billion market cap company currently appearing slightly undervalued based on Fair Value analysis.
Hsu explained that the upgrade reflects a belief that the market has overly accounted for a pessimistic scenario that is not supported by TSMC’s current business performance. The company’s impressive 33.89% revenue growth and 56.12% gross profit margin in the last twelve months support this view. He noted that TSMC’s revenue rate in the first quarter of 2025 remained robust, and he anticipates a 5% quarter-over-quarter increase in the top line for the second quarter, driven by inventory build-up for the upcoming iPhone release and sustained demand from AI servers that use GPU and ASIC technologies.
Despite the positive outlook for the near term, Daiwa has adjusted its second-half 2025 projections for TSMC to account for the uncertainties surrounding the Trump administration’s tariff policies. However, Hsu remains confident in TSMC’s ability to maintain a structural revenue growth rate of 15-20% annually.
The Daiwa analyst also mentioned that the current stock valuations adequately reflect the geopolitical risks, including the unresolved issues with Intel (NASDAQ:INTC). This comprehensive view led to the decision to only slightly modify the price target for TSMC’s shares. The company’s strong fundamentals and expected growth in key technology sectors underpin Daiwa’s upgraded rating.
In other recent news, Taiwan Semiconductor Manufacturing Company (TSMC) reported its first-quarter revenue for 2025, which exceeded consensus estimates and aligned with the high end of its guidance range. The company announced March revenue of NT$286 billion, marking a 10% increase month-over-month and a 46% rise year-over-year. Total (EPA:TTEF) revenue for the first quarter amounted to NT$839 billion, showing a 42% increase compared to the same period last year. Despite concerns about a January earthquake affecting revenue, the results surpassed expectations. Bernstein analysts maintained their Outperform rating on TSMC stock with a $251.00 price target, emphasizing the company’s leadership in advanced packaging technologies. Meanwhile, Stifel analysts adjusted their expectations for TSMC’s capital expenditure budget, predicting spending at or below the lower end of its 2025 range. They also noted potential slowdowns in TSMC’s expansion plans, particularly for its 2nm technology. JPMorgan revised its price target for TSMC shares to NT$1,300, citing a more cautious revenue forecast for the fiscal year 2025, despite a positive outlook for the second quarter.
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