Citi Raises TSMC Price Target as AI Chip Demand Strengthens Growth Outlook

Citi has raised its target price for Taiwan Semiconductor Manufacturing Co. (TSMC) to NT$3,800 from NT$2,875, while maintaining its Buy rating, citing stronger confidence in the chipmaker’s long-term growth as demand for advanced artificial intelligence (AI) semiconductors continues to accelerate.

The investment bank believes TSMC is increasingly likely to upgrade its 2026 revenue growth forecast and long-term business outlook when it reports quarterly earnings and hosts its analyst meeting on July 16. According to Citi, sustained AI-related demand is providing greater earnings visibility and reinforcing the company’s dominant position in the global semiconductor industry.

TSMC shares climbed about 2.3% to NT$2,500 in early Taipei trading on Monday, leaving the stock just around 1.4% below its 52-week high as investors responded positively to Citi’s more optimistic assessment ahead of the earnings announcement.

Citi expects robust demand across TSMC’s advanced manufacturing technologies, driven not only by AI graphics processing units (GPUs) but also by custom AI chips, cloud-based tensor processing units (TPUs), networking semiconductors, optical interconnects, and high-performance CPUs. The brokerage also forecasts continued increases in wafer pricing through next year as demand for the company’s cutting-edge N2 and N3 process technologies remains strong.

The brokerage noted that TSMC’s competitive advantage now extends beyond process technology leadership, with its massive manufacturing scale and advanced packaging capabilities becoming key differentiators. Citi estimates that production capacity for TSMC’s leading-edge semiconductor nodes could reach approximately 350,000 to 400,000 wafers per month by the end of 2028, supporting stronger factory utilization, improved pricing power, and healthy profit margins despite rising depreciation costs.

Reflecting continued expansion plans, Citi also raised its capital expenditure forecasts for 2027 and 2028 to between $75 billion and $80 billion. The brokerage expects TSMC to invest aggressively in advanced fabrication facilities and next-generation packaging technologies to meet surging AI infrastructure demand.

Citi added that advanced packaging has become one of TSMC’s fastest-growing business segments, with demand expanding well beyond AI GPUs into custom AI accelerators, processors, and networking chips. Continued investment in technologies such as CoWoS, SoIC, and future packaging solutions is expected to strengthen TSMC’s leadership position as global spending on AI infrastructure continues to rise.