Research analysts at Needham & Company encouraged investors to buy the weakness in Taiwan Semiconductor Manufacturing (TSM), saying the sell-off in the stock was “overdone given the solid” earnings report for the fiscal Q1 2024. TSMC stock is still up 27% year-to-date.

“Overall, we think the selloff on a solid print is overdone, and likely reflects market sentiment on overall semis rather than anything TSMC specific,” analysts at Needham said in a note.

“We are maintaining our current PT and would be buyers on the weakness,” they added.

The research firm holds a 12-month target price of $168 on the chipmaker’s US-listed shares, implying more than 27% upside from current levels.

Analysts at Needham highlighted that TSMC's first-quarter numbers for 2024 indicate a stable fab utilization rate at around 80%, despite notable year-over-year revenue growth.

They forecast that most TSMC fabs, with the exception of the 5nm, 3nm, and 8-inch processes, will likely maintain a utilization rate below 80% for the year. Wafer shipment growth for TSMC in 2024 is projected at 8%, while wafer average selling price (ASP) is expected to rise by 15%.

This scenario represents a “one of a kind cycle” for TSMC, analysts at Needham noted, with the company’s revenue already in double digits, while volume recovery remains sluggish amid “strong growth in the low-volume, high-value market such as AI,” they added.

Meanwhile, analysts at Bank of America lifted their price target on TSMC’s Taipei-listed shares from NT$880 to NT$920 “to reflect faster server AI growth and better 2Q guidance.”