Be optimistic about TSMC and make another big profit! Foreign media estimates that the market value in 2030 will be astonishing and the stock price will rise so much

TSMC has a high degree of advantage in advanced logic chip manufacturing. (Illustration, AFP)

As the demand for AI continues to rise, TSMC is regarded as an important beneficiary of the development of the AI industry. Foreign media "The Motley Fool" analyzed that TSMC is expected to continue to expand revenue and profits in the next few years with its advanced process technology and global wafer foundry leadership. If the company maintains strong growth, investing US$5,000 now may even increase its value to approximately US$15,000 by 2030.

Analyst Keithen Drury pointed out that TSMC is the world's largest wafer foundry and one of the few companies with advanced process technology and mass production capabilities that can produce high-end AI chips. Huida's GPUs, as well as the chips used in Apple's smartphones, are closely related to TSMC's manufacturing technology, making it an important beneficiary of the continued expansion of AI infrastructure.

TSMC’s grasp of the demand for AI chips is also considered one of its competitive advantages. Because the company provides foundry services to many AI computing chip designers, it can grasp market trends from customer needs and plan capacity expansion in advance.

In terms of overseas layout, TSMC has invested heavily in a wafer factory in Arizona, USA, and committed to investing US$265 billion to expand US chip production capacity. Reports believe that in addition to responding to market demand, this move will also help decentralize production layout and reduce the risk of excessive concentration of chip manufacturing in Taiwan.

TSMC previously estimated that the compound annual growth rate of AI chip sales from 2024 to 2029 will reach more than 50%. Some chip companies have begun to express optimism about demand from 2030 to 2031, indicating that the AI-related investment boom may not end in the short term.

From the perspective of business structure, about 70% of TSMC's business in the third quarter came from the field of high-performance computing, including AI-related products; smartphones accounted for about 20%, and the remaining about 10% came from other industries. As the demand for AI chips continues to increase, the growth of high-performance computing business will become an important factor affecting TSMC's future operations.

Regarding TSMC's future stock price performance, the report proposed a growth scenario calculation. Analysts believe that considering that TSMC's previous high growth forecast included some years of rapid sales growth, if more conservative assumptions are used to estimate future revenue annual growth at 35%, it may be one of the more reasonable scenarios. For reference, analysts expect TSMC's growth rate to reach 38% in 2027.

In terms of profitability, TSMC’s profit margin in recent months is about 51%. In its trial calculation, the report set the future profit rate at 50% to retain a certain degree of conservatism.

Based on the above assumptions, if TSMC's revenue grows by 35% annually from now to 2030, revenue will reach approximately US$518 billion by then; if the profit margin is maintained at 50%, profits will reach approximately US$259 billion.

In terms of valuation, TSMC’s current price-to-earnings ratio is about 28 times. If it is assumed that the price-to-earnings ratio drops to 25 times in 2030, the report estimates that its market value may reach US$6.5 trillion, which is nearly three times compared to the current market value of approximately US$2.2 trillion.

Overall, the report believes that AI computing demand, advanced process technology and the expansion of high-performance computing business will be important driving forces for TSMC's growth in the next few years.