TSM stock is a ‘buy’ despite recent Intel news – analyst says

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Written on Apr 3, 2024

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Intel commits to cutting reliance on outsourced wafers.
BofA analyst Brad Lin still recommends buying TSM stock.
TSMC shares are already up 40% versus the start of 2024.

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Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) is in the green on Wednesday after a Bank of America analyst issued a bullish note in its favour.

Is TSM stock worth buying in 2024?

Brad Lin recommends buying TSM stock even though Intel announced plans of cutting its reliance on outsourced wafers to about 20% (previously at 30%) this week.

But the BofA analyst is not convinced that $INTC can deliver on its ambitious plans for its foundry business. In fact, that segment lost about $7.0 billion last year – up some 35% versus 2022.

$INTC -4.3% (outlines new reporting structure to reflect transition to foundry model; expects Intel Foundry operating losses to peak in 2024; provides historical financial metrics for new reporting segments)

4HR broadening formation pic.twitter.com/1evTRkLBq9
— Taylor (@TLAMB91) April 3, 2024

If anything, muted progress of Intel’s Foundry could actually be a benefit for TSMC, Lin added in his research note today.

TSM shares are up roughly 40% versus the start of this year at writing.

Why else are TSM shares well positioned?

The Bank of America analyst expects Taiwan Semiconductor Manufacturing Co. Ltd. to gain market share in the era of artificial intelligence.

TSMC has guided for a compound annualised growth rate of up to 20% for the long term which assumes limited contribution from Intel, he added.

All in all, Brad Lin is confident that TSM stock is well-positioned as the company’s structural growth outlook is solid despite the $INTC news.

In January, the semiconductor behemoth said it earned $1.44 on a per-share basis in its fourth quarter – well ahead of $1.37 per share that experts had forecast. TSM shares also pay a dividend yield of 1.44% which makes up for another good reason to have it in your investment portfolio.