Taiwan Semiconductor Manufacturing Co. (TSM) stock pushed higher Tuesday, continuing a rally that kicked off late last week when the company landed a one-year U.S. export license to keep importing American chipmaking equipment for its China operations.
The U.S. Commerce Department's approval covers Taiwan Semiconductor's Nanjing fabrication facility, which means U.S.-controlled tools can now ship without requiring individual approvals each time. That's a big operational relief for a company trying to maintain production flow across its global manufacturing footprint.
Wall Street Gets More Excited About AI
The export license wasn't the only thing lifting shares. Goldman Sachs analysts led by Bruce Lu added fuel to the rally by raising their price forecast for Taiwan Semiconductor by a hefty 35% to 2,330 New Taiwanese dollars. Their reasoning? AI represents a "multi-year growth engine" for the chipmaker, Bloomberg reported Monday.
The Goldman team backed up their bullish stance by pointing to improving profit margins, even as the company prepares to spend approximately $150 billion over the next three years to expand capacity. That's not small change, but Wall Street seems convinced the AI wave will more than justify the investment.
Climbing the Market Cap Rankings
Riding the AI boom, Taiwan Semiconductor's ADRs jumped 5.17% on Friday, pushing its market capitalization to approximately $1.66 trillion. That vaulted it past Meta Platforms Inc. (META) and Broadcom Inc. (AVGO) in the market cap rankings.
The stock has climbed more than 52% over the past year, establishing Taiwan Semiconductor as the world's sixth-largest company by market capitalization. Not bad for a company that operates largely behind the scenes, making chips for everyone else's products.
Nvidia Deepens Taiwan Connections
Meanwhile, Nvidia (NVDA) is strengthening its ties with Taiwan as AI chip demand continues surging. CEO Jensen Huang is expected to visit Taiwan this month to meet with officials and partners, and possibly announce plans for a new Taipei headquarters.
Nvidia wants to increase its chip capacity in Taiwan, specifically with Taiwan Semiconductor, to meet rising demand that's coming from multiple directions, including China. The relationship between these two companies has become increasingly critical as AI infrastructure buildout accelerates globally.
TSM Price Action: Taiwan Semiconductor shares were up 2.09% at $328.97 during premarket trading on Tuesday. The stock is trading near its 52-week high of $331.25.
