AI Frenzy Propels TSMC to Record High and Trillion Dollar Club

Taiwan Semiconductor Manufacturing Company (TSMC) achieved a record high on Thursday, driven by strong second-quarter revenue and booming demand for AI applications. This milestone solidifies TSMC's position as Asia's most valuable company, with a market value now exceeding one trillion dollars.

AI Demand and Investment Inflow

The global AI surge has significantly boosted chipmaker stocks, particularly benefiting TSMC. As the world's largest contract chipmaker, TSMC's clientele includes AI leader Nvidia, propelling the demand for AI-capable chips. This year, foreign investors have infused $4.8 billion into Taiwan's stock market, heavily dominated by TSMC. Despite this, HSBC reports that Asian funds remain underweight on Taiwan, indicating potential for more investment.

Stock Performance

TSMC shares, which have Apple among their customers, have surged nearly 80% this year, far outpacing the 35% rise of the Taiwan SE Weighted Index. On Thursday, TSMC's shares rose over 2% to a record T$1,080, valuing the company at T$28 trillion ($861 billion). In the US market, TSMC's American Depositary Receipts (ADRs) jumped 4.8% to a record $192.79 on Monday, momentarily pushing its market value to $1 trillion.

Earnings Report and Global Impact

TSMC is set to release its full second-quarter earnings on July 18. The company's strong results have lifted global chip stocks, with the Philadelphia semiconductor index rising 2.4% to a record on Wednesday.

Future Prospects

"Optimism continues to grow around AI-related demand and potential pricing powers, as TSMC's position as the leading foundry supplier should elevate earnings in 2025," said Daniel Tan, portfolio manager at Singapore-based Grasshopper Asset Management. He noted that TSMC's value is expected to appreciate further as customers compete for capacity in a market with tight supply.

Currency Note

($1 = 32.5490 Taiwan dollars)