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Investing.com -- Morgan Stanley has lifted its price target on Taiwan Semiconductor Manufacturing Co. to a Street-high NT$1,588 from NT$1,388, citing strong artificial intelligence demand, stable foreign exchange, and pricing power.
“We also expect TSMC to beat its coming 4Q25 revenue and gross margin guidance, given the strong AI demand and stable FX,” the analysts wrote. “Buy into prints – our sector Top Pick.”
The firm said “AI semi demand continues to show upside,” highlighting growth in both AI application-specific integrated circuits and GPUs into 2026.
It raised its CoWoS capacity assumption to 100,000 by 2026 from 90,000, noting Nvidia’s Rubin chip could consume 3nm wafers and that “we also sense pull-in from its networking chip schedule.
“That has caused a shortage in TSMC’s 3nm wafer supply, and hence the company may need to hike its 3nm wafer price by at least 5% in 2026, in our view.”
On advanced processes, Morgan Stanley said customers are “embracing TSMC’s 2nm, A16, and A14 technologies to achieve better energy efficiency.”
The analysts pointed to checks suggesting Apple’s iPhone 18 models will adopt 2nm chips in 2026, while Nvidia’s Feynman may use the A16 process in 2028. Intel is also “engaging with TSMC for A14 outsourcing.”
Morgan Stanley increased its 2026 and 2027 earnings estimates by 10% and 14.8%, respectively. It now sees 2025 revenue up 33% year-on-year in U.S. dollar terms, with gross margin at 58.5%.
The firm expects 4Q25 revenue to be flat to up quarter-on-quarter, “better than the Street’s forecast of a 5%-10% Q/Q drop.”