UBS Raises TSMC Price Target to T$3,400 on Strong AI Chip Demand Outlook

Taiwan Semiconductor Manufacturing Company (TSMC) received a fresh vote of confidence from UBS after the investment bank raised its price target for the world's largest contract chipmaker, citing robust artificial intelligence (AI) demand and an improving long-term growth outlook.

UBS increased its price target on TSMC to T$3,400 from T$3,000, while reaffirming its Buy rating on the stock. The brokerage also lifted its forecast for the company’s 2026 revenue growth, highlighting sustained momentum driven by rising demand for advanced semiconductors used in AI applications.

According to UBS, TSMC is expected to continue expanding aggressively over the next several years as global demand for AI chips, high-performance computing processors, and edge AI technologies accelerates. The brokerage believes the company could also introduce another round of price increases by early 2027, further supporting revenue and profitability.

A key factor behind UBS’s bullish outlook is TSMC’s anticipated increase in capital expenditures between 2026 and 2028. The additional investments are expected to expand manufacturing capacity, helping the chipmaker address ongoing supply constraints while reassuring customers seeking reliable access to advanced semiconductor production.

TSMC has established itself as the leading contract chip manufacturer globally, producing some of the industry's most advanced chips. Its manufacturing capabilities have made it a critical supplier for major AI companies developing powerful processors and accelerators. As AI adoption continues to expand across cloud computing, data centers, and consumer devices, demand for TSMC’s advanced chip production remains exceptionally strong.

UBS analysts noted that a higher commitment to capital spending is essential to reducing customer concerns about limited production capacity and the need to diversify suppliers. While competitors such as Samsung Foundry, Intel, and Terafab continue investing in semiconductor manufacturing, UBS believes TSMC remains well positioned to maintain its technology leadership.

The brokerage also expects stronger growth across central processing units (CPUs), AI accelerators, and emerging edge AI applications to support further expansion in TSMC’s production capabilities.

Investors are now turning their attention to TSMC’s upcoming second-quarter earnings report, scheduled for July 16. During the earnings call, UBS expects management to provide additional details regarding future capital expenditure plans, production capacity expansion, and the company’s competitive strategy against rival chipmakers.

According to market forecasts, TSMC is expected to report earnings per share (EPS) of approximately $3.80 on revenue of around $40.06 billion for the second quarter. Strong financial results, combined with updated guidance on AI-driven demand and manufacturing expansion, could further reinforce investor confidence in the semiconductor giant.

As artificial intelligence continues reshaping the global technology industry, TSMC remains one of the biggest beneficiaries of the AI boom. Its leadership in advanced chip manufacturing, expanding production capacity, and growing customer base position the company to capitalize on increasing semiconductor demand for years to come.