Taiwan Semi price target raised to $270 from $225 at Needham on AI growth

Published 01/07/2025, 12:42
Taiwan Semi price target raised to $270 from $225 at Needham on AI growth

Investing.com - Needham has raised its price target on Taiwan Semi (NYSE:TSM) to $270.00 from $225.00 while maintaining a Buy rating, citing strong AI-driven growth prospects through 2027. The semiconductor giant, currently valued at $959 billion, shows strong momentum with a 33% return over the past year. According to InvestingPro analysis, the stock appears slightly undervalued at its current price of $226.49.

The firm projects Taiwan Semi’s total revenue will grow from approximately $114 billion in 2025 to $130 billion in 2026 and reach $160 billion in 2027, according to its newly launched AI wafer demand model. This ambitious projection builds on TSM’s impressive track record, with a 22% revenue CAGR over the past five years and recent revenue growth of 40%.

AI revenue specifically is expected to increase from $26 billion in 2025 to $33 billion in 2026 and $46 billion in 2027, with silicon content growth becoming an increasingly important driver for the company’s AI revenue expansion.

Needham forecasts Taiwan Semi’s capital expenditure will grow moderately from $40 billion in 2025 to $45 billion in 2026 and $50 billion in 2027, with a shift in mix toward equipment that could boost wafer fab equipment outlook, especially for 2027.

The firm also notes that the ramp-up of Rubin Ultra should lead to growth re-acceleration in 2027 and beyond, while CoWoS/HBM packaging capital expenditure could remain muted in 2026 before HBM packaging capital expenditure picks up in 2027.

In other recent news, TSMC has seen several key developments. Goldman Sachs raised its price target for TSMC to NT$1,210, citing increased demand for advanced chip packaging technologies and a positive outlook on CoWoS expansion. The firm also added TSMC to its APAC Conviction List, forecasting revenue growth of 26% in fiscal year 2025 and 14% in 2026, driven by AI and high-performance computing demand. Citi maintained its Buy rating on TSMC, expressing confidence in the company’s technological advancements and strategic positioning, particularly in the high-performance computing and AI sectors.

Meanwhile, Morgan Stanley (NYSE:MS) reduced its price target for TSMC to TWD2,330, while maintaining an Overweight rating, suggesting potential concerns regarding order reductions for CoWoS technology could be mitigated by increased AI investment from major companies. Daiwa Securities upgraded TSMC’s stock rating to Buy, despite a slight reduction in the price target, due to robust revenue performance and anticipated growth from AI servers and upcoming product releases. These recent developments highlight the mixed but generally positive analyst sentiment surrounding TSMC’s future performance in the semiconductor industry.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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