As trading resumes in Taipei following the extended Lunar New Year holiday, all eyes are on Taiwan Semiconductor Manufacturing Company (TSMC). A substantial valuation gap has emerged, with the chipmaker’s US-listed shares having surged to record levels while the local market was closed. This sets the stage for a potential catch-up rally when the Taiwan Stock Exchange reopens.
US-Taiwan Trade Deal and Robust Demand Provide Tailwinds
The bullish sentiment surrounding TSMC is supported by concrete developments. A recently signed trade pact between the United States and Taiwan offers a structural advantage, reducing US tariffs on Taiwanese technology exports from 20% to 15%. This is particularly beneficial for TSMC as it undertakes a massive expansion of its production capacity in Arizona.
Furthermore, the semiconductor giant confirmed robust demand in early February, reporting a year-on-year revenue jump of nearly 37% for January. This strength is driven primarily by high-performance computing and artificial intelligence segments. In response to these strong fundamentals, investment firm DA Davidson initiated coverage with a “Buy” rating and a $450 price target, highlighting TSMC’s technological lead in advanced packaging for AI accelerators.
Should investors sell immediately? Or is it worth buying TSMC?
Analyst Targets Signal Major Upside
According to a Bloomberg compilation dated February 20, the average 12-month price target for TSMC’s American Depositary Receipts (ADRs) stands at approximately $424. When converted to the ordinary shares traded in Taiwan, this implies a target price of around NT$2,650. This represents a significant premium of about 38% to the last closing price of NT$1,915 on February 11, which was the final trading session before the eleven-day break.
The momentum is well-founded. During the holiday period, TSMC’s ADRs continued trading in New York, briefly hitting all-time highs before a slight pullback. This performance underscores sustained confidence in the company’s leadership in manufacturing advanced semiconductors.
Monday Trading to Set the Tone
Local market observers anticipate that the pent-up valuation discrepancy will be at least partially corrected when trading resumes on Monday. A substantial move in TSMC shares toward these analyst estimates could provide considerable momentum to the broader Taiex index, potentially driving it toward the psychologically significant 35,000-point level. The direction of TSMC’s stock is likely to set the tone for the entire Taiwan market in the coming week.
Ad
TSMC Stock: Buy or Sell?! New TSMC Analysis from February 20 delivers the answer:
The latest TSMC figures speak for themselves: Urgent action needed for TSMC investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from February 20.
TSMC: Buy or sell? Read more here...
