BofA Identifies TSMC as Key Apple Beneficiary, Raises Price Target

Investment bank Bank of America (BofA) has expressed renewed optimism for Taiwan Semiconductor Manufacturing Company (TSMC), a leading manufacturer of computer chips (TSMC: NYSE). This positive outlook stems from Apple’s recent advancements in artificial intelligence (AI) and the anticipated impact on TSMC’s business.

BofA analysts issued a research report raising their price target for TSMC stock from NT$920.00 to NT$1,040.00 and reaffirmed a “Buy” rating. This upward revision reflects confidence in TSMC’s future growth prospects, fueled by the company’s strong position within the global semiconductor industry.

The analysts specifically cite Apple’s focus on AI development as a key driver of this growth. Apple’s recent announcements at the Worldwide Developers Conference (WWDC) underscored their commitment to integrating AI into their products and services . This strategic shift necessitates a robust supply of high-performance chips, a domain where TSMC reigns supreme.

BofA acknowledges the ever-increasing demand for semiconductor content across various industries. This aligns with the bank’s previous analyses of the burgeoning field of on-device AI. They view TSMC as a crucial beneficiary and facilitator of this technological advancement .

Furthermore, BofA has adjusted its earnings estimations for TSMC from 2024 to 2026. This upward revision is attributed to two primary factors: the anticipated surge in demand for AI-powered devices and a more favorable outlook for chip prices (average selling price or ASP) .

The new price target assigned by BofA reflects a higher price-to-earnings (P/E) ratio for TSMC stock. The previous P/E ratio 18 increased to 20 to account for the anticipated growth fueled by AI and Apple’s strategic direction .

It is important to note that Apple constitutes a significant portion of TSMC’s revenue, with estimates suggesting Apple accounts for roughly 25% of the chipmaker’s total sales. This close partnership positions TSMC to directly benefit from Apple’s AI endeavors.

In conclusion, BofA’s bullish outlook on TSMC is primarily driven by Apple’s intensifying focus on AI and the resulting rise in demand for high-performance chips. With TSMC’s established leadership in chip manufacturing, the company is well-positioned to capitalize on this technological shift and experience significant growth in the coming years.