Bernstein on Monday outlined a bullish view on Taiwan Semiconductor Manufacturing Co., raising its price target to NT$2,200 and projecting roughly 20 percent upside for the chipmaker's shares. In a note, analyst Mark Li emphasized that growth tied to artificial intelligence continues to gain strength while other end-market demand remains robust.
Li wrote that "AI continues gathering momentum, and non-AI demand also remains strong," and he flagged that "XPU demand still exceeds TSMC's capacity," while "TPU demand1 is getting stronger lately." The analyst said several major customers - SK hynix, Micron Technology and NVIDIA - have asked TSMC to produce HBM base dies, a development Bernstein expects will raise the share of AI-related revenue from 18 percent of total revenue last year to the "low- to mid-20s percent" range by 2026.
To address rising AI workload needs, Bernstein expects TSMC to "build slightly more CoWoS capacity," and anticipates expansion among outsourced assembly firms as well. The firm noted that any weakness in non-AI demand would likely be counterbalanced by AI-related growth, and it pointed to TSMC's exposure to high-end smartphones as an additional support for overall demand resilience.
On the geopolitical front, Bernstein said the ongoing conflict in the Middle East does not appear to threaten TSMC's operations. The note acknowledged that energy prices could increase but observed that electricity represents only a low single-digit percent of TSMC's revenue, and that the company "can easily hike prices" to pass on higher costs. Concerns about potential shortages - including helium or other materials - were described as unfounded, with TSMC reportedly confirming "no disruption from the conflict."
Bernstein's financial model projects a 40 percent rise in earnings this year and a compound annual growth rate of 20 percent into 2027 and 2028. Given the combination of demand dynamics and the firm's forecasts, Li advised that geopolitical volatility could create buying opportunities, recommending investors "build more position on short-term pullbacks."
The note synthesizes capacity planning, customer requests for advanced packaging and memory-related die production, and cost pass-through assumptions to support its outlook. It underscores AI as a broadening source of revenue - extending beyond specialized XPU chips - and highlights TSMC's ability to adapt capacity and pricing to changing market conditions.
Summary
Bernstein raised its TSMC price target to NT$2,200 and sees roughly 20 percent upside, driven by expanding AI demand, customer requests for HBM base dies, incremental CoWoS capacity additions and limited operational impact from the Middle East conflict. The firm models strong near-term earnings growth and suggests investors increase positions on short-term pullbacks.