TSMC’s AI Revenue Forecast Raised to $90B by 2029, Says Needham

Needham & Company has raised its price target for Taiwan Semiconductor Manufacturing Co. (TSMC) to $270 from $225, reaffirming a Buy rating based on a bullish long-term AI growth outlook. In a new note, the firm projects TSMC's AI-related revenue to surge from $26 billion in 2025 to $90 billion by 2029, fueled by advancements in chip packaging and memory integration.

TSMC’s AI growth doesn’t hinge on massive unit volume increases, Needham said. Instead, gains are expected from higher silicon content per package, more compute dies, and custom HBM (High Bandwidth Memory) base die adoption. This shift is expected to drive revenue from $114 billion in 2025 to $160 billion by 2027, with AI revenue hitting $46 billion in 2027 alone.

While 2026 could see a slowdown due to limited upgrades in Nvidia’s Rubin platform, Needham still forecasts at least 20% year-over-year AI revenue growth that year. Growth is projected to reaccelerate to 40% in 2027 and 45% in 2028, as TSMC benefits from platform transitions and demand for advanced packaging.

Capital expenditure is also expected to climb steadily, from $40 billion in 2025 to $50 billion in 2027. The firm anticipates a major shift from infrastructure to equipment spending, with wafer fabrication equipment (WFE) costs possibly reaching a record $29 billion in 2027. Although CoWoS investment may remain subdued through 2027, a rebound in HBM packaging CapEx is expected to support the rollout of Nvidia’s Rubin Ultra platform in 2028.

The report highlights TSMC’s strategic positioning in the AI semiconductor value chain and underscores its critical role in supporting future compute-intensive applications.