Taiwan Semi’s AI Chip Revenue Will Soar for Years, Says Analyst

Taiwan Semi stock is up 15% this year. The company’s AI chips will keep selling like hotcakes, one analyst predicts. (I-Hwa Cheng /AFP via Getty Images)

Taiwan Semiconductor Manufacturing’s AI chip business will grow rapidly over the several years, according to Needham.

On Tuesday, analyst Charles Shi reiterated his Buy rating on TSMC shares and increased his ADR price target to $270 from $225.

“We expect TSMC’s foundry business to strengthen as we do not foresee a competitive challenge for the next several years,” he wrote.

In midmorning trading, TSMC’s American depositary receipts were down slightly to $226.42. Shares are up 15% this year.

Shi estimated TSMC’s AI revenue will increase from $26 billion this year to $33 billion next year and to $46 billion in 2027. AI revenue will be driven by new annual AI chips from Nvidia, he said.

“We recommend TSMC stock as a core holding for investors who look to invest in semiconductors, which we view as the foundation of the expanding digital economy,” Shi wrote.

TSMC dominates the market for manufacturing high-end chips. It leads the market for making semiconductors used for AI applications, including chips from Nvidia.

The company also manufactures the core processors inside Apple iPhones, Qualcomm mobile chipsets, and processors made by Advanced Micro Devices.

Write to Tae Kim at tae.kim@barrons.com