Stifel Starts Taiwan Semi (TSM) at Buy

Stifel analyst Sahej Singh initiates coverage on Taiwan Semi (NYSE: TSM) with a Buy rating and a price target of $515.00.

The analyst comments "Key Enabler of AI Hardware Driving Long-Term Compounded Growth via Trough-on-Trough Cyclical Earnings Accretion, and a 'Must-Own' Multi-Year Position with Opportunistic Entries: TSM is the name in our foundry coverage the AI buildout cannot ship without, and we think the more useful way to own it is as a long-term industrial-cyclical compounder rather than a momentum vehicle. Management raised the long-term model in January (a ~25% revenue CAGR in USD through 2029, with the through-cycle gross margin floor lifted to 56%+ from 53%+) and, despite a material acceleration of capex, management continues to underscore confidence in these targets. The debate, in our view, is not about demand but near-term margin durability, wherein the 2-nanometer ramp and the overseas fab build are drags (2-3pp widening to 3-4pp later) against a mix that keeps improving as leading-edge and advanced packaging scale. We would flag that the setup is well owned, with nearly all analysts at Buy, and that at ~8-11x FY2 EV/Sales TSM sets the leadership premium to the foundry group while still trading below AI-levered fabless peers, wherein the Taiwan-strait discount arguably caps the multiple until US buildout milestones visibly diversify leading-edge supply. That combination of high conviction and crowded positioning is why we frame TSM as a 'must-own' multi-year position rather than a chase; we would add into industrial-cyclical drawdowns and look to trough-on-trough earnings accretion overtime."

For an analyst ratings summary and ratings history on Taiwan Semi click here. For more ratings news on Taiwan Semi click here.

Shares of Taiwan Semi closed at $415.32 yesterday.

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