Taiwan Semiconductor Manufacturing Co. (TSMC) stock is hovering near its 52-week high after Citi Research raised its price target by 32%, citing an expanding and increasingly durable artificial intelligence chip cycle. The Taiwan-listed shares recently traded around NT$2,445–NT$2,465, close to the year’s peak of NT$2,535.
Citi lifted its target to NT$3,800 from NT$2,875 and maintained a Buy rating ahead of TSMC’s July 16 Q2 2026 earnings report. Wall Street expects earnings per ADR unit of $3.80, up from $2.47 a year ago, on revenue of $40.02 billion versus $30.07 billion in Q2 2025. TSMC’s own May 2026 revenue surged 30.1% year-over-year to T$416.98 billion, and CEO C.C. Wei described AI demand as “extremely robust,” with the company planning to spend at the top of its $52–$56 billion capex range this year.
Broader AI demand drives bullish case
Citi’s argument rests on the broadening of AI chip demand beyond graphics processors into custom AI chips, cloud TPUs, networking silicon, optical interconnects, and CPUs. This diversification reduces reliance on any single product or customer and strengthens revenue visibility. The brokerage expects TSMC to raise its 2026 revenue growth outlook and long-term targets during the upcoming earnings call.
Pricing power and capacity expansion
Wafer prices are forecast to keep rising through 2027 as demand for TSMC’s advanced N2 and N3 process nodes intensifies, protecting margins despite higher depreciation from heavy capital spending. Citi estimates that TSMC’s leading-edge node capacity could approach 350,000–400,000 wafers per month by the end of 2028, supporting high utilization and reassuring customers of supply. Capex estimates for 2027 and 2028 were raised to $75–$80 billion.
Advanced packaging becomes central
Citi also highlights TSMC’s advanced packaging capabilities as a key competitive moat. As AI chips grow more complex, the ability to package them efficiently with high-bandwidth memory is becoming as critical as manufacturing the silicon itself. UBS analyst Sharon Lin raised her TSMC target to NT$3,400 from NT$3,000, noting that increased investment commitments should ease customer supply concerns. On TipRanks, TSMC’s U.S.-listed ADR carries a Strong Buy consensus with an average target of $520, implying about 19.7% upside.
