Broker Expects Higher 2026 Growth Guidance
Citi has increased its price target on Taiwan Semiconductor Manufacturing (NYSE:TSM), saying the world’s largest contract chipmaker is well positioned to upgrade its 2026 revenue outlook and long-term growth expectations when it reports quarterly results later this month.
The brokerage lifted its target price to NT$3,800 from NT$2,875 while maintaining its Buy rating, arguing that sustained demand for advanced artificial intelligence semiconductors continues to strengthen the company’s earnings outlook ahead of its analyst meeting on 16 July.
Shares Advance as Investors Price in Strong AI Demand
TSMC shares gained around 2.3% to NT$2,500 in early trading in Taipei on Monday, leaving the stock roughly 1.4% below its 52-week high as investors responded to Citi’s more optimistic assessment before the upcoming earnings announcement.
The brokerage expects demand to remain strong across multiple advanced semiconductor applications, extending beyond AI graphics processors to include custom AI chips, cloud-based TPUs, networking silicon, optical interconnect technologies and high-performance CPUs.
Citi also anticipates wafer pricing will continue to strengthen into next year as demand accelerates for TSMC’s advanced N2 and N3 manufacturing processes.
Scale and Advanced Packaging Seen as Key Advantages
According to Citi, TSMC’s competitive strength increasingly lies in its manufacturing scale and leadership in advanced packaging technologies rather than process technology alone.
The brokerage estimates production capacity for the company’s leading-edge manufacturing nodes could reach between 350,000 and 400,000 wafers per month by the end of 2028, supporting higher factory utilisation, stronger pricing power and resilient profit margins despite rising depreciation costs.
Capital Spending Expected to Increase Further
Citi also raised its capital expenditure forecasts for 2027 and 2028 to between $75 billion and $80 billion, reflecting expectations that TSMC will continue expanding advanced fabrication capacity alongside next-generation packaging capabilities.
The brokerage believes demand for advanced packaging is broadening well beyond AI graphics processors to include custom AI accelerators, CPUs and networking processors, making it one of the company’s fastest-growing business segments.
Continued investment in technologies such as CoWoS, SoIC and future packaging platforms is expected to reinforce TSMC’s market leadership as global spending on artificial intelligence infrastructure continues to expand.