Strong AI Demand Drives Capacity Expansion as Citi, Goldman Raise TSMC Price Targets

Growing global demand for generative AI and high-performance computing is concentrating advanced-chip orders at TSMC. As a major foundry partner to companies including NVIDIA and Apple, TSMC is running its advanced-process capacity at full utilization. Its pricing power and expansion progress have become key indicators for the global AI supply chain and Taiwanese equity valuations.

UBS sharply raised its TSMC price target to NT$3,400 in its latest report and reiterated its Buy rating, citing persistently strong momentum in AI chip demand. UBS also expects TSMC could begin another round of price increases in early 2027 to reflect cost pressures from advanced-process capacity expansion and higher capital expenditure.

TSMC is a major global supplier of advanced wafer fabrication and packaging services, with demand for AI accelerators keeping leading-edge capacity tight. Aletheia Capital believes TSMC's technology leadership and capacity-expansion capabilities will enable it to continue securing AI chip orders, a key driver of medium- to long-term growth.

Aletheia Capital recently reiterated its “buy” rating after a site visit to TSMC and raised its price target to NT$3,500. The firm expects AI demand and expanded capacity in advanced processes and packaging to drive a compound annual growth rate of more than 30% from 2024 to 2027, followed by a potential second wave of accelerating growth in 2028.

TSMC benefited from advanced-chip demand fueled by generative AI, with high-performance computing and AI servers emerging as key growth engines. Its gross margin climbed to 66.2% in the first quarter of 2026, covering January through March, underscoring its lead in advanced processes, higher capacity utilization and pricing power. The market consequently raised its earnings forecasts for the next two years.

After TSMC released its first-quarter 2026 results, Daiwa Capital and Morgan Stanley raised their price targets to NT$2,330 and NT$2,588, respectively, citing expectations for continued rapid growth in AI server revenue. TSMC shares briefly hit a record NT$2,135 in early trading, helping lift Taiwan’s stock market by more than 900 points before it reversed course and fell below 38,000.

TSMC is the global leader in advanced semiconductor processes and foundry services. Demand for AI accelerators and high-performance computing chips is driving growth in its advanced-node and advanced-packaging businesses. J.P. Morgan expects this demand to sustain strong revenue growth at TSMC in 2026 and 2027 while increasing the importance of capacity expansion over the medium to long term.

In its latest report, J.P. Morgan raised its price target for TSMC to NT$2,400 per share from NT$2,250, an increase of NT$150, or about 6.7%. The firm also sharply raised its forecast for TSMC's cumulative capital expenditure over the next three years, reflecting the need to keep expanding advanced-node and packaging capacity to meet rapidly growing AI and HPC orders in 2026 and 2027.