Taiwan Semiconductor Manufacturing (NYSE: TSM) might just be the most important company in the world — and even with the level of publicity that goes along with it, TSM stock might very well be undervalued at the moment.
The business is set to secure a whopping 66% of the pure-play foundry market in 2025. It is also a key supplier to established tech-giants such as Apple, Broadcom, Nvidia, Advanced Micro Devices, and others.
There’s quite a simple thesis to be made — if the biggest narrative in the financial markets today, artificial intelligence (AI), doesn’t turn out to have been a huge, unwarranted bubble that provided little in terms of actual economic value, then the aforementioned companies will benefit. If they benefit, TSM benefits.
As noted by Finbold researcher Andreja Stojanovic, TSM’s revenue for 2024 was nearly $90 billion. In spite of that impressive figure, it had a market capitalization of just $741.12 billion at press time. In contrast, Nvidia’s 2024 revenue was $60.9 billion, while its market cap stood at $2.66 trillion at the time of writing — even when accounting for its recent cascade from above $150 to around $110.
At the time of publication, TSM stock was trading at a price of $172.17, having marked a 12.82% decline since the start of the year.
Despite the recent dip, analysts are starting to adopt an increasingly bullish tone when it comes to TSM shares. Researchers from several eminent Wall Street firms recently revisited their outlooks.
Researchers double down on bullish outlook for TSM stock
On Monday, March 10, Bernstein analyst Mark Li doubled down on an earlier ‘Overweight’ rating. The researcher kept a $251 price target on TSM stock. If met, this mark would correspond to a 45.78% rally.
Li highlighted the company’s February 2025 revenue report as the key driver behind his decision. While the month marked an 11.3% decrease on a sequential basis, the semiconductor company’s revenue still grew by an impressive 43.1% on a year-over-year (YoY) basis.
A day later, Brad Lin, a Bank of America tech analyst, also reiterated a ‘Buy’ rating. The researcher maintained a $265 price target for Taiwan Semiconductor Manufacturing stock. His 12-month price forecast implies a 53.91% upside from current prices.
In a note shared with investors, Lin focused primarily on the recently announced $100 billion investment the company will make in the United States. Although it did note initial concerns surrounding IP leakage and gross profit margins slipping, BofA maintains a bullish outlook on TSM stock after a thorough review. The analyst did note, however, that the firm revised its internal forecast for TSM’s earnings downward.
Readers should also note that TSM stock is currently trading at 21.3 times forward earnings — a rather attractive ratio for a well-established and prospective producer and supplier of components that are crucial to high-growth tech companies.
Featured image via Shutterstock
