TSMC's stock price soared to a record high, with securities firms praising it as the "king of negotiations," aiming for a new global market cap high

According to the information from the Wise Finance APP, the stock price of Taiwan Semiconductor (TSM.US) hit a historical high in the Taipei market, rising by 4.5% at one point, with a year-to-date increase of over 75%. This surge is attributed to multiple brokerages such as Morgan Stanley raising their target price, with Morgan Stanley increasing its target price by about 9%. It is expected that Taiwan Semiconductor will raise its full-year sales expectations in the financial report to be released next week. Brokerages believe that Taiwan Semiconductor has strong bargaining power, and the increase in wafer prices is a reflection of this capability.

It is reported that according to a report from Macquarie Securities, Taiwan Semiconductor has learned through supply chain visits that most customers have agreed to raise foundry prices to ensure stable supply, which will further drive up Taiwan Semiconductor's gross margin. Analysts predict that by 2025, Taiwan Semiconductor's gross margin will climb to 55.1%, and by 2026, it is expected to approach sixty percent, reaching 59.3%.

Industry insiders analyze that this price increase may be based on a comprehensive consideration of market demand, capacity, and costs. It is reported that major companies such as Apple, Qualcomm, NVIDIA, and AMD have already placed large orders for Taiwan Semiconductor's 3nm process capacity, and the phenomenon of customers queuing up is expected to continue until 2026.

Lai Yuzhang, a semiconductor industry analyst at Macquarie, pointed out that as most of Taiwan Semiconductor's customers have agreed to raise foundry prices in exchange for stable and reliable supply, this will drive the future gross margin to increase year by year.

According to Lai Yuzhang's estimation, Taiwan Semiconductor's gross margin will climb to 55.1% in 2025, and it will approach sixty percent by 2026, reaching 59.3%. This year, with the improvement in production efficiency, the gross margin has already been raised to 52.6%.

With the long-term trend driven by AI, coupled with the rising gross margin, Taiwan Semiconductor's profit compound annual growth rate (CAGR) from 2023 to 2026 is expected to reach 26%. Lai Yuzhang has raised Taiwan Semiconductor's earnings per share (EPS) for 2024-2026 by 5%, 2%, and 1% respectively, with adjusted EPS reaching 39.2 yuan, 51.2 yuan, and 65.3 yuan.

Based on strong profit growth and a relatively low price-to-earnings ratio (only 19.6 times, much lower than TSMC's 34.9 times and ASML's 32.9 times), Lai Yuzhang has raised Taiwan Semiconductor's applicable price-to-earnings ratio to 25 times, giving it an "outperform the market" rating, with the target price raised from 1,000 yuan to 1,280 yuan, a 28% increase, ranking second highest among foreign investors.

In addition, regarding the capital expenditure that the market is concerned about, Lai Yuzhang believes that based on continuous investment in advanced processes, especially 3nm and 2nm, he has raised the capital expenditure forecast for Taiwan Semiconductor in 2025 and 2026 to 35 billion US dollars and 37 billion US dollars, respectively Lai Yuzhang expects that Taiwan Semiconductor will complete the capacity of 5,000 wafers of 2 nanometers by the end of 2024, and by the end of 2027, the capacity will be significantly expanded to 90,000 wafers.

Meanwhile, Morgan Stanley analyst Charlie Chan mentioned in a report: "Taiwan Semiconductor's 'hunger marketing' strategy seems to have been successful. Our supply chain checks show that Taiwan Semiconductor has conveyed a message to the market: there may be a shortage of cutting-edge foundry supply in 2025, and customers may not be able to obtain sufficient capacity because they have not fully recognized the value of Taiwan Semiconductor."

Morgan Stanley analyst Gokul Hariharan also expects Taiwan Semiconductor to raise revenue expectations during the earnings conference call, stating in the report: "We expect Taiwan Semiconductor's demand for AI accelerators to be more positive."

Securities firms such as Morgan Stanley, JP Morgan, Nomura Holdings, and SMBC Nikko Securities are optimistic about Taiwan Semiconductor's performance in the second quarter. Data compiled by Bloomberg shows that as the world's most advanced chip manufacturer, Taiwan Semiconductor is expected to achieve a year-on-year revenue growth of 36%, the fastest since the fourth quarter of 2022.

Currently, foreign investors have set target prices for Taiwan Semiconductor, with a consensus of over a thousand yuan. From high to low, they are: HSBC at 1,370 yuan, Macquarie at 1,280 yuan, Goldman Sachs at 1,160 yuan, Citigroup at 1,150 yuan, Barclays at 1,096 yuan, Morgan Stanley and JP Morgan at 1,080 yuan each, UBS at 1,070 yuan, and Bank of America at 1,040 yuan.

In fact, after Taiwan Semiconductor's stock price surpassed the thousand yuan mark, global market attention has significantly increased. The market value of its American depositary receipts once exceeded Berkshire Hathaway, making it the eighth largest company in the world by market value, with a current market value exceeding $950 billion. This series of positive news reflects the market's strong confidence in Taiwan Semiconductor's future performance