BofA maintained its Buy rating and $760 per share price target on Taiwan Semi (TSM) in a note Thursday following Nvidia's (NASDAQ:NVDA) earnings.
The bank said there is a positive read-through for TSM from Nvidia's release while AI keeps growing.
"TSMC is the enabler of generative AI and a key beneficiary, manufacturing the best-in-class semiconductor chips (GPU/ASIC/accelerators) and CoWoS advanced packaging to companies globally," said analysts at Bank of America.
"NVIDIA’s stronger April quarter guidance of ~US$24bn bodes well for TSMC’s business," they added. "Despite market concerns on demand sustainability, we are glad to learn of NVIDIA’s strong growth outlook in 2024/2025 with expanding AI adoption across firms, industries, and countries."
The bank expects cloud AI revenue contribution to jump to ~10% in 2024 from mid-single digit % in 2023. Analysts added that the current TSMC valuation looks attractive and they expect the stock to re-rate on AI growth.