1 Wall Street Analyst Thinks Taiwan Semiconductor Stock Is Going to $240. Is It a Buy?

Core Viewpoint - Taiwan Semiconductor Manufacturing Company (TSMC) is expected to see further upside in its stock price, with Barclays analyst Simon Coles raising the price target from $215 to $240 while maintaining an overweight rating [1][2]. Group 1: AI Chip Demand - Demand for AI server processors, including GPUs, is experiencing significant growth, with management expecting revenue from these chips to more than triple for the full year [3]. - AI chips are projected to contribute a mid-teens percentage to TSMC's total revenue in 2024, indicating strong market potential [4]. Group 2: Financial Performance - TSMC reported a 36% year-over-year revenue growth in the third quarter, with earnings per share increasing by 54% [4]. - The current valuation of TSMC is attractive, trading at 27.1 times this year's consensus earnings estimate, and even more appealing at a forward P/E ratio of 21.5 based on the 2025 consensus estimate [5]. Group 3: Market Position and Future Outlook - Despite recent stock gains, TSMC's valuation remains justified given its above-average revenue and earnings growth compared to the S&P 500 index's average forward P/E of 23.9 [5]. - The cyclical nature of the chip industry poses risks, but the opportunities in the AI chip market suggest that TSMC is likely to deliver strong growth in 2025 and beyond, making it a solid investment [6].