Why Is Taiwan Semiconductor Stock Gaining Tuesday?

Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) stock rose Tuesday, extending a rally that began late last week after the company secured a one-year U.S. export license to keep importing American chipmaking equipment for its China operations.

The U.S. Commerce Department approved the license for Taiwan Semiconductor’s Nanjing fab, allowing U.S.-controlled tools to ship without case-by-case approvals.

Goldman Turns More Bullish On AI Growth

Adding fuel to the rally, Goldman Sachs analysts, led by Bruce Lu, raised their price forecast for Taiwan Semiconductor by 35% to 2,330 New Taiwanese dollars, identifying AI as a “multi-year growth engine” for the chipmaker, Bloomberg reported on Monday.

Also Read: Taiwan Semiconductor Starts Making Its Most Powerful Chips At Scale

The Wall Street analysts backed their thesis by highlighting improving profit margins, even as the company plans to spend approximately $150 billion over the next three years to expand capacity.

AI Boom, Nvidia Ties Lift Valuation

Fueled by the AI boom, Taiwan Semiconductor’s ADRs jumped 5.17% on Friday, lifting its market capitalization to approximately $1.66 trillion, surpassing that of Meta Platforms Inc. (NASDAQ:META) and Broadcom Inc. (NASDAQ:AVGO).

The stock has increased by more than 52% over the past year, making Taiwan Semiconductor the world’s sixth-largest company by market capitalization.

At the same time, Nvidia is strengthening ties with Taiwan as AI chip demand surges.

CEO Jensen Huang is expected to visit Taiwan this month to meet with officials and partners, and possibly announce a new Taipei headquarters. Nvidia seeks to increase its chip capacity in Taiwan, specifically with Taiwan Semiconductor, to meet rising demand, particularly from China.

TSM Price Action: Taiwan Semiconductor shares were up 2.09% at $328.97 during premarket trading on Tuesday. The stock is trading near its 52-week high of $331.25, according to Benzinga Pro data.

Read Next:

• Qualcomm Turns ‘Physical AI’ From Buzzword Into Reality

Photo by Jack Hong via Shutterstock