TSMC Takes Steps Closer to $2 Trillion Market Cap Following Chip Stocks' Resurgence: Top Executive Makes a Move

Shares of Taiwan Semiconductor Manufacturing Co. experienced a 2% uptick in premarket trading on Wednesday, joining a broader recovery in the chip sector. This placed the world's largest contract chipmaker within striking distance of a $2 trillion market capitalization.

Major chip stocks saw significant gains in the session, with Intel rising 4% and the Semiconductor ETF (SOXX) increasing by 2.6%, extending its gains fueled by optimism surrounding a potential U.S.-Iran peace deal, despite a brief pause in momentum the previous session.

TSMC produces cutting-edge semiconductors for industry heavyweights like Nvidia and Advanced Micro Devices. The biggest consumers of these chips, including cloud service providers Alphabet, Amazon, and Microsoft, have set aside $725 billion for AI-related investments this year.

In April, the Taiwanese giant raised its full-year sales guidance and announced its capital spending would be trending towards the upper end of its existing forecast range of up to $56 billion in 2026.

The TSM stock has gained 41% over the past year. On June 2, based on the closing price, the company's market cap reached a peak of $1.99 trillion according to TradingView.

A recent filing from the company on Tuesday disclosed that Vice President Lipen Yuan purchased 1,000 TSMC shares for approximately $75,260, increasing his direct holdings to 4,000 shares.

Last week, TSMC released its monthly update, revealing that revenue in May rose by 30% to NT$416.98 billion ($13.2 billion), with combined April and May sales up around 24% from the same period last year, according to Bloomberg calculations.

Analysts predict sales growth of 35% in the second quarter, which ends in June, according to estimates from Koyfin.

The latest performance indicates steady demand for advanced chips, which power data centers and other systems used in AI applications, smartphones, and automobiles.

Last month, Nvidia CEO Jensen Huang announced that the U.S. chip designer would establish a headquarters in Taiwan and invest up to $150 billion annually in the region.

The retail sentiment for TSMC on Stocktwits remained 'extremely bearish', unchanged from the previous day.

'$TSM looking shaky despite 30% YoY May revenue growth and raised guidance. Big money is piling into puts with over $9m in downside premium bought today… Feels like a big caution sign for anyone thinking about short-term upside plays,' a trader wrote, while some also said they were loading shares with a long-term view.