Who will be the next "trillion-dollar company": Berkshire Hathaway, Eli Lilly, or Taiwan Semiconductor?

The "Trillion Dollar Club," traditionally dominated by tech giants like Microsoft and Apple, may soon welcome new members. Warren Buffett's Berkshire Hathaway, Eli Lilly profiting from weight loss drugs, and Taiwan Semiconductor, Nvidia's key supplier, are all seen as strong contenders to break the trillion-dollar market value barrier.

As of February 28th, Berkshire Hathaway, Eli Lilly, and Taiwan Semiconductor have all entered the top ten of the US stock market value list with outstanding financial performance, surpassing Tesla, the last of the "Big Seven."

This year, Eli Lilly, Berkshire Hathaway Class B shares, and Taiwan Semiconductor's US stocks have risen by 28%, 13.7%, and 25% respectively.

Media analysis suggests that the emergence of Berkshire Hathaway, Eli Lilly, and Taiwan Semiconductor provides investors who previously focused on tech giants with new options, potentially becoming a driving force for the rise of the US stock market in the future.

Matt Orton, Chief Market Strategist at Raymond James Investment Management, stated that besides the "Big Seven," there are other companies that can excite the market, which is a positive development for the market:

"I think it's a good thing for the market, showing the broad-based rise in non-tech sectors. Apart from large tech companies, there may be many other things worth investors' attention in the market."

"Tortoise and Hare" Ready to Move

Media reports liken the market value ascent of Berkshire Hathaway to a slow-moving "tortoise," while Eli Lilly is portrayed as a nimble "hare" leaping through fields. Taiwan Semiconductor seems to fall somewhere in between, leveraging its solid position in the semiconductor industry, stable financial performance, and strategic foresight.

Looking at the long term, Berkshire Hathaway's market value has been slowly rising over the years and is now close to $900 billion. In the past two years, Eli Lilly's market value has more than doubled to over $700 billion, propelled by the halo of weight loss drugs. Taiwan Semiconductor, on the other hand, has been rapidly rising since last year, riding the wave of AI and Nvidia. Media analysis points out that as long as these three companies can replicate the growth in 2023 over the next few months, their market values will all surpass a trillion, joining the ranks of tech giants like Apple, Microsoft, and Nvidia.

Thanks to the strong performance of its insurance business and increased investment income, Warren Buffett's company Berkshire Hathaway saw a 30% surge in operating profit and a doubling of net profit year-on-year last quarter. However, even the so-called Oracle of Omaha, Buffett, cannot determine if the profit growth can be sustained. Recently, he reminded investors in the shareholder letter that Berkshire Hathaway is almost "impossible to achieve astonishing performance" in the coming years.

Nevertheless, some analysts believe that the steady rise in Berkshire Hathaway's market value itself is attractive and may become one of the catalysts for the stock price. Quincy Krosby, Chief Global Strategist at LPL Financial, stated, "If the market believes the company has made a smart deal - Buffett usually triggers such a reaction in the market - it will further drive the company's stock price up, and Berkshire Hathaway could further rise above a trillion dollars."

Investment banks have also been increasingly optimistic about Eli Lilly's future revenue. Earlier this month, Morgan Stanley analyst Terence Flynn raised Eli Lilly's target price from $805 to $950, the highest in the industry. Flynn pointed out that Eli Lilly is expected to become the first biopharmaceutical company with a market value of $1 trillion with its oral GLP-1 drug Orforglipron currently in trials.

Shams Afzal, Portfolio Manager at Carnegie Investment Counsel, believes that from treating heart failure to sleep apnea, Eli Lilly's weight loss therapy is poised to open up new markets, potentially driving Eli Lilly towards a trillion-dollar milestone:

"Eli Lilly has truly become a unicorn in the biopharmaceutical field and is expected to reach a trillion dollars in the future."

As for Taiwan Semiconductor, according to TrendForce's Global Top Ten Wafer Foundry Rankings for the third quarter of 2023, Taiwan Semiconductor still maintains absolute dominance, holding the leading position in the global wafer foundry field, firmly seated at the industry's top spot.

Some analysts believe that with the drive of emerging technologies such as AI and high-performance computing, the importance of advanced processes in the wafer foundry industry is becoming increasingly prominent. Taiwan Semiconductor, with its technological leadership, cost structure, and pricing advantages, especially in advanced processes, is expected to drive the company's performance to new heights. Therefore, analysts have set Taiwan Semiconductor's target stock price at $140.60. Taiwan Semiconductor is currently the foundry for NVIDIA's AI chips - A100/H100, and also the exclusive foundry for AMD. These all demonstrate the importance of Taiwan Semiconductor in providing foundry services for top AI chip giants.

According to the latest forecast by market research firm Gartner, the AI chip market is expected to grow by 25.6% by 2024, reaching $67.1 billion. It is projected that by 2027, the AI chip market size will be more than double that of 2023, reaching $119.4 billion.