Shares of the world's largest chipmaker, Taiwan Semiconductor Manufacturing (TSM.US), surged on Monday, marking their biggest single-day gain since last April, as they continued to ride the wave of optimism surrounding artificial intelligence demand at the start of the new year.
The stock of TSMC, a key supplier to NVIDIA (NVDA.US) and Apple (AAPL.US), soared as much as 6.9% in Taipei trading, hitting a record high.
This surge came after Goldman Sachs Group significantly raised its price target for TSMC by 35% to NT$2,330, citing expectations for the company to achieve robust growth again this year.
Despite concerns about an overheated market, investors continued pouring more funds into AI-themed stocks, with TSMC leading a broad rally in Asian tech shares on Monday.
Fears of missing out on further gains overshadowed worries about short-term volatility, even amid concerns sparked by US actions against Venezuela, making the sector the primary driver of regional stock markets once again.
Goldman Sachs analyst Bruce Lu stated in a report, "We view AI as TSMC's growth engine for the coming years."
He noted that the company's profit margins are improving, even as it is expected to invest $150 billion over the next three years to expand its production capacity.
Among other chip stocks, South Korea's Samsung Electronics rose for a fifth consecutive trading session.
The memory chip maker is expected to release preliminary results later this week, providing more clues for the market to judge whether its earnings can support the sector's substantial gains.
Additionally, Japanese equipment manufacturers Tokyo Electron and Advantest both gained over 7% on Monday.
Chinese chip stocks also strengthened, after the National Integrated Circuit Industry Investment Fund increased its stake in SMIC and DeepSeek proposed a more efficient AI training method.
TSMC's surge pushed the Taiwan Weighted Index up over 3%, breaking through the 30,000-point milestone to set a new record.
Taiwan's Vice Finance Minister Juan Ching-hwa remarked that this level was "almost unimaginable" not long ago.
However, he also pointed out to legislators that, given TSMC's dominant position, the market "expects a more balanced structure."
The company's stock has surged 44% in 2025, with its market capitalization exceeding $1 trillion for the first time.
This reflects growing investor confidence in its central role in the AI boom, as numerous global chip companies rely on its manufacturing services.
Bernstein analysts, including Mark Li, wrote in a report last Friday, "In advanced semiconductors, TSMC's capacity is king."
Acknowledging bubble concerns, the analysts stated that the "theme for the year remains AI" and advised investors to "focus on quality names."
TSMC is scheduled to announce its financial results on January 15.
Capital market activity could serve as another near-term catalyst for the sector, particularly for Chinese stocks: according to Bloomberg-compiled data, about 11 AI-related companies plan to list in Hong Kong this month, potentially raising a total of up to $4.1 billion.
Meanwhile, valuation factors are seen as supportive for Asian stocks relative to their global peers.
Valuation metrics for tech hardware companies in the region are currently around 16 times estimated earnings, compared to the Nasdaq 100 Index's forward price-to-earnings ratio of 25 times.