By Sam Boughedda
BofA analysts lifted the firm's price target on Taiwan Semiconductor Manufacturing (NYSE:TSM) to TWD 670 (TWD 1 = $0.03247) from TWD 610, reiterating a Buy rating on the stock in a note to clients Thursday.
The analysts told investors that TSMC is among their 20 global AI stock picks due to the rising and widening applications of large language models (LLMs) and generative AI led by ChatGPT.
"We think the generative AI should act as one of the greatest drivers, thanks to the substantial computational requirements for running and training the AI models," the analysts wrote.
"Datacenter (including supercomputing) related revenue currently accounts for ~10% of the revenue, and we estimate that CPU/GPU/accelerator upside for generative AI could potentially contribute 1%-2% initially and likely up to 8% in a bull case," they added.
They also believe there are structural long-term opportunities for the company.
"With rising computing power demand to shorten the time to market and provide better service quality with a faster response time, we believe the pursuit of leading-edge technology will not decelerate. Advanced packaging adoption will also grow. TSMC, with tech leadership in both, will ride on the structural uptrend," they concluded.