Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) has regained its market capitalization of $500 billion as investors bet on tech leaders poised to benefit from the upcoming AI revolution.
On Tuesday, TSMC, Asia’s most valuable company, experienced a more than 3% surge in its stock price. This boost was fueled by not only hopes of a recovery from the chip downturn caused by the COVID-19 pandemic but also by the anticipation of a surge in demand for chips essential for training artificial intelligence services like OpenAI’s ChatGPT.
Investors are flocking to stocks such as NVIDIA Corporation (NVDA) and Oracle Corporation (ORCL) that are well-positioned to meet the rising demand for chips, computing power, and storage required for AI training. The introduction of OpenAI’s ChatGPT in November has triggered a global wave of investment, which is expected to drive sales of components and infrastructure needed for developing and hosting next-generation AI applications.
The AI frenzy gained momentum following Nvidia’s exceptional sales targets last month, surpassing even the most optimistic analyst forecasts. In line with this, Morgan Stanley has raised TSMC’s price target, attributing it to the higher demand for energy-efficient and low-cost AI custom chip designs.
Morgan Stanley analysts commented, “With the killer apps of generative AI (e.g., ChatGPT), we are seeing the semi- industry’s growth stage shifting from Mobile Computing to the AI Computing era. We view TSMC as a key enabler of future AI semis given its technology leadership.”
