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Investing.com -- Needham & Company has outlined a roadmap for Taiwan Semiconductor Manufacturing Co. to grow its AI revenue to $90 billion by 2029, citing expanding silicon content, technology transitions, and rising capital expenditure.
The firm raised its price target on the stock to $270 from $225, maintaining a Buy rating in a note on Tuesday.
"We are launching our TSMC AI wafer demand model," Needham wrote, projecting AI revenue to rise from $26 billion in 2025 to $46 billion in 2027. Total (EPA:TTEF) revenue is expected to grow from about $114 billion in 2025 to $160 billion by 2027.
Needham believes that TSMC doesn’t need substantial unit volume growth to hit its AI target.
Instead, “significant silicon content growth from increasing number of compute dies in a package and the transition to custom HBM base dies should sustain the rapid AI revenue growth.”
The firm says that AI revenue may decelerate in 2026 due to slower AI accelerator unit growth and limited silicon advancement in Nvidia’s Rubin platform.
Still, Needham expects “at least” 20% year-over-year growth next year, followed by a “significant growth acceleration to nearly 40% YoY in ’27 and 45% YoY in ’28.”
Capital expenditure is forecast to rise steadily, from $40 billion in 2025 to $50 billion by 2027, with a major shift toward equipment spending.
"We foresee a significant mix shift away from infrastructure and into equipment, which may lead to a record $29B WFE spending by TSMC in 2027,” the analysts said.
Needham also sees muted CoWoS investment through 2027 but expects HBM packaging CapEx to rebound strongly that year, supporting the launch of Nvidia (NASDAQ:NVDA)’s Rubin Ultra in 2028.