Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the AI Stocks on the Market’s Radar. On January 4, Goldman Sachs raised its price target on the stock to NT$2,330.00 from NT$1,720.00 while maintaining a Conviction Buy rating.
The firm has raised its earnings estimates for 2026 and 2027 by up to 15%, driven by a “multi-year growth engine” in artificial intelligence (AI). According to analyst Bruce Lu, surging demand for AI tokens is rising exponentially, which means chip demand will be ahead of supply.
Lu forecasts TSMC to spend over $150 billion on capex from 2026 to 2028 to meet surging demand, including $54 billion in 2027 as new fabs become operational.
Robust demand is also anticipated to keep TSMC’s 3nm/5nm wafer capacity tight through 2027. The firm anticipates 30% revenue growth in 2026 and 28% in 2027, up from his earlier estimates of 22% each year.
Gross margins are also likely to exceed 60% from 2026 to 2028, even though there is elevated capex and overseas growth. Steady productivity gains and limited dilution at foreign fabs will likely lead to this growth.
The firm also raised its CoWoS shipment forecasts to 1,185,000/2,195,000 wafers in 2026/2027 and CoWoS capacity to 1,275,000/2,310,000 wafers. This raise is a reflection of stronger AI-related demand.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures and sells advanced chips used in artificial intelligence applications.
While we acknowledge the potential of TSM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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