5 big analyst AI moves: Price target hikes for TSMC, SAP; ASML upgraded to Buy

Investing.com -- Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.

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TSMC stock target hiked at Bernstein on improved AI outlook

Bernstein raised its price target on Taiwan Semicon (TW:2330) to NT$1,444 from NT$1,260, citing stronger-than-expected AI demand and signs of recovery in non-AI markets. Analysts see revenue rising 33% in dollar terms this year, above the company’s 30% guidance.

“We actually argue our projection [is] already conservative as we assume 4Q25 to have unusually low seasonality,” they wrote.

Bernstein expects 17% growth in 2026, supported by record ICT exports from Taiwan to the U.S. and the ramp-up of Blackwell Ultra AI servers. AI is projected to more than double its share of revenue this year, rising from the mid-teens to the low-20s.

Non-AI demand is also improving, with tariff-related pull-forward boosting standard products. While higher tariffs could eventually weigh on demand, current grace period extensions are expected to delay any hit until 2026.

Bernstein raised its capex forecasts for 2026–27 on U.S. expansion and higher capital intensity, though still below consensus due to equipment reuse. “TSMC [is] leveraging N7 equipment for some production steps of N5 as an example to keep its capex in check,” analyst Mark Li said.

Capex is projected to rise by about one-third this year and continue increasing into 2026. Pricing power should help offset these investments and FX headwinds, with 5–10% price hikes planned for N5, N4 and N3 nodes from early 2026.

Next-generation nodes such as N2 and A16 are expected at premium prices, while Arizona-made chips could see their tariff premium widen into the mid-teens or higher.

Li also noted Intel’s 18A process remains behind schedule, leaving it reliant on TSMC for around 10% of revenue this year and next.

“We honestly view all these as noises & advise investors to focus on fundamentals,” he wrote, pointing to TSMC’s cost and execution advantages.

The analyst forecasts earnings per share (EPS) to jump 35% this year and grow at a 23% CAGR through 2027. Gross margin is seen easing slightly from nearly 59% in the first half of 2025 to about 57% in 2026–27.

With shares trading at 19x forward earnings, a 20% discount to the SOX index, Bernstein views TSMC’s valuation as attractive.

SAP target price hiked on AI demand, BDC strength

Barclays raised its price target on SAP (ETR:SAPG) to €300 from €275, citing accelerating cloud adoption, rising AI demand, and the company’s Business Data Cloud (BDC) as key growth drivers. The bank reiterated its Overweight rating.

“Our assessment of SAP’s AI and BDC offering, combined with our updated cloud transition model, suggests a ~13% revenue CAGR to FY30,” analysts wrote, adding they are “10% ahead on EPS,” with a forecast of €14.3 by 2030.

The team estimates AI and BDC could add about €3.5 billion to revenue by the end of the decade, leaving the bank roughly 6% ahead of consensus.

BDC was described as “a substantial evolution of the company’s previous data and analytics offering, allowing customers to seamlessly unify data and provide a solid foundation to deploy AI.”

On profitability, Barclays sees “substantial margin upside potential,” projecting costs will grow at about 85% of revenues until 2030, supporting average margin expansion of more than 100 basis points per year.

Free cash flow is expected to compound at 18% annually from 2025 to 2030, enabling SAP to reach the “Rule of 40” by the end of the decade.

“SAP remains uniquely positioned in European software and even globally, with high and predictable growth combined with meaningful margin upside continuing to stand out, in our view,” the bank concluded.

UBS upgrades ASML, expects chipmaker to return as ‘quality compounder’

UBS on Thursday upgraded ASML to Buy, saying the chip-equipment maker is poised to re-emerge as a “quality compounder” after a stretch of underperformance. The bank raised its price target to €750 from €660.

The call comes after ASML shares fell 20% over the past year on concerns around weaker lithography intensity and uncertainty in China.

“Given ASML’s long product lead times and high level of integration into customers’ long-term roadmaps, the market is likely to look through a relatively well telegraphed weak 2026E to 2027E, when we see the return of ASML as a quality compounder delivering 20% EPS CAGR 2026-30E,” analyst Francois-Xavier Bouvignies wrote.

UBS sees a turning point in 2027, supported by TSMC’s ramp of its A14 logic node, which should boost EUV exposures, and by fading uncertainty at Intel and Samsung. High-NA EUV tools are expected to be a key driver, with meaningful adoption from 2027–28 and the potential to represent 15–20% of sales by decade-end.

Nearer-term, Bouvignies pointed to catalysts such as updates on EUV exposure and High-NA adoption at industry events in early 2026, commentary in earnings, the launch of a new low-NA EUV model in the second half of 2026, and potential new customer wins.

China remains a risk, with ASML’s revenues from the region forecast to fall 12% this year and another 20% in 2026 before normalizing at 15–20% of sales from 2028. Still, UBS said the overhang is becoming more manageable.

On valuation, ASML trades at around 24 times 2027 earnings, below its 10-year average of 28 times. UBS also lifted post-2027 EPS forecasts by 4–7% on greater confidence in High-NA adoption, driving the higher target price.

Stocks to continue rising ‘as long as cracks don’t begin to form within AI spending expectations’

Wolfe Research said U.S. equities are likely to keep pushing higher as long as investor confidence in AI-related spending holds up, though elevated expectations also present risks for 2026.

The broker noted that markets have already weathered two sharp rotations this year. The first came in January, when the debut of tougher-than-expected tariff policy on Liberation Day, alongside concerns sparked by DeepSeek, drove a defensive shift.

Momentum turned again after the Trump administration reversed course on tariffs in April, with AI spending emerging as the central driver of performance.

Wolfe highlighted a “33% rise in 2025 capital spending expectations since the beginning of the year by the Mag 7 companies (particularly AMZN, MSFT, META, and GOOGL)” as the force powering technology and AI-linked stocks.

“As long as cracks don’t begin to form within AI spending expectations, stocks will continue to grind higher after the seasonally weaker September period,” the analysts wrote.

Still, they cautioned that “these lofty expectations can cut both ways,” making AI spending forecasts a potential headwind for 2026

UBS lifts glass maker Corning to Buy on AI-driven fiber growth

UBS upgraded Corning to Buy from Neutral, citing accelerating AI-driven fiber demand as the key growth driver for its Optical Communications unit, and raised its price target to $84 from $65.

UBS analysts said they “see ongoing AI-driven fiber growth continuing to exceed market expectations, driving sustainable higher growth and re-rating in the stock.”

They forecast Optical sales to grow at a 27% CAGR through 2027, with revenues about 18% above consensus. The unit, which made up just 15% of profits a decade ago, now accounts for 40% and is expected to surpass 50%.

The bank estimates that of roughly $2.4 billion in earnings growth between 2024 and 2029, about $2.1 billion will come from Optical, highlighting its shift away from Display.

UBS also projects adjusted EPS to rise at a ~20% CAGR through 2029, versus mid-single-digit historically, with forecasts of $3.05 in 2026 and $3.65 in 2027, both ahead of consensus.

Beyond fiber, UBS sees growth from solar, specialty glass, and automotive, with solar alone expected to add $1.5 billion in sales by 2028. Corning has secured 80% of restarted U.S. solar capacity, supporting above-average margins.

Free cash flow is modeled at $1.6–2.0 billion annually in 2025–26, leaving $0.5–1 billion for buybacks or capex after dividends.

UBS lifted its next twelve months (NTM) EPS estimate to $3.35 and applied a 25x multiple.

“With adj EPS growing at a structurally higher rate of ~20% vs ~MSD% historically, we see a re-rating in the stock as sustainable, and expect the stock to compound with continued earnings growth,” analysts led by Joshua Spector wrote.