Nvidia’s (NVDA) CEO Jensen Huang praised Taiwan Semiconductor Manufacturing Co. (TSMC) (TSM) during a recent visit to Taiwan, calling it one of the “all-time greats.” He further stated that buying TSMC’s stock would be a “very smart” move. His remarks underscore TSMC’s pivotal role in driving the global chip industry and its strong investment appeal.
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TSMC is the world’s largest contract chipmaker. The company supplies advanced semiconductors to top tech giants, including Nvidia, and Advanced Micro Devices (AMD).
Nvidia’s Huang Endorses TSMC
Huang said his main reason for visiting Taiwan was to thank TSMC for its work on Rubin, Nvidia’s next-generation AI chip platform. Additionally, Huang noted that TSMC is currently developing six new products for Nvidia, including a new central processing unit (CPU) and a new general processing unit (GPU) designed for advanced computation, particularly AI applications.
Trump Administration Rules Out Equity Stakes in TSMC
Huang made these remarks while addressing a question about Washington’s potential interest in taking a stake in TSMC. Notably, the U.S. administration has shown interest in taking stakes in tech firms receiving funding under the CHIPS Act. Earlier this week, U.S. Commerce Secretary Howard Lutnick said the government is still considering taking a 10% stake in struggling chipmaker Intel (INTC) and indicated it may pursue similar stakes in other companies receiving federal grants.
According to the Wall Street Journal, TSMC executives even held preliminary talks about the possibility of returning U.S. subsidies if a Trump-led administration pursued equity in the company. However, an official later confirmed that the administration does not plan to seek equity stakes in semiconductor firms like Micron (MU) and TSMC, which are ramping up investment.
For context, the 2022 CHIPS Act provides grants and loans to chipmakers to boost U.S. chip production. Under it, the government finalized $6.6 billion in subsidies for TSMC last year to help build three advanced plants in the U.S.
Is TSMC Stock a Good Buy?
According to TipRanks, TSM stock has a Strong Buy consensus rating based on seven Buys and one Hold assigned in the last three months. At $266.0, the TSMC average stock price target implies a 17% upside potential.
