Taiwan Semiconductor Manufacturing Co. (TSMC, 2330.TW), the world’s leading contract chipmaker, is set to hold its second-quarter earnings call on July 16, and market attention is rapidly intensifying. Against a backdrop of sustained strong demand for artificial intelligence (AI), the foreign institutional investor community has launched a new wave of target price upgrades ahead of the call. The latest reports from UBS Securities and CLSA have both raised their TSMC target prices to NT$3,400 and NT$3,330 respectively, making them a focal point of market discussion.
TSMC’s stock price reflected the optimistic expectations on the 29th, rising NT$30, or 1.28%, to close at NT$2,370, with trading volume reaching 33,000 lots. The Taiwan Weighted Index surged 428.14 points on the same day to close at 44,999.9, but total trading value was NT$997.51 billion (approximately $31.3 billion), marking the first time it fell below the trillion-dollar threshold since May 20, presenting a pattern of rising prices on declining volume.
Sharon Lin, UBS Taiwan Semiconductor Industry Analyst, pointed out in her latest report that TSMC’s second-quarter revenue in US dollar terms will grow 11% to 12% quarter-over-quarter, with a gross margin reaching 67.3%, both hitting the high end of the company’s guidance. Looking ahead to the third quarter, driven by volume production of flagship smartphones and new cloud AI accelerators, revenue is expected to grow another 11% quarter-over-quarter, setting a new single-quarter record.
Lin further raised TSMC’s 2026 US dollar revenue growth forecast from 36% to 37% year-over-year, and significantly increased the 2027 and 2028 revenue growth forecasts from 33% and 27% to 38% and 30%, respectively. Within this, the High-Performance Computing (HPC) segment will serve as a key growth engine, with projected growth of 58% and 51% in 2026 and 2027, respectively, and its share of total revenue climbing from 67% to 73%.
Regarding advanced process pricing strategy, UBS expects TSMC may raise advanced process quotes by 5% to 10% in early 2027, reflecting tight production capacity and strong customer demand for advanced nodes. The analyst added, “We believe that increasing capital expenditure commitments is crucial to alleviating customer concerns about limited supply and the need to diversify second-source suppliers.”
In response to potential growth drivers such as AI, CPUs, and accelerators, Lin significantly raised TSMC’s capital expenditure forecasts for 2026 through 2028, from the previous estimates of $56 billion, $75 billion, and $85 billion to $60 billion, $80 billion, and $95 billion (approximately NT$1.9 trillion, NT$2.5 trillion, and NT$3.0 trillion), indicating the company is actively expanding capacity to capture AI opportunities.
On capacity planning, UBS expects TSMC’s 3nm process monthly capacity to expand significantly from 120,000 wafers per month (kwpm) at the end of 2025 to 220,000 wafers per month by 2028, a scale that will be three times the combined capacity of equivalent nodes from Intel and Samsung’s foundry operations, further solidifying its dominance in advanced process technology.
Based on the strong operational outlook, UBS slightly raised its TSMC earnings per share (EPS) estimates for 2026 through 2028, by 1%, 7%, and 7% respectively, to NT$99.84, NT$139.27, and NT$182.04. The firm maintained a “Buy” rating and raised its target price from NT$3,000 to NT$3,400 in one go, making it the second-highest among domestic and foreign institutional investors.
Another foreign brokerage, CLSA, also released an optimistic outlook. According to its revised model estimates, AI computing will remain in a state of undersupply for the next three years, with a potential risk of approximately 10% oversupply not emerging until 2030. CLSA specifically highlighted that token growth continues to far exceed expectations, making the upstream semiconductor sector still quite attractive.
In addition to raising TSMC’s 2027 and 2028 profit estimates by 3% and 12%, respectively, CLSA also raised its 2027 capital expenditure forecast to $75 billion (approximately NT$2.4 trillion), with 2028 capex potentially reaching $90 billion (approximately NT$2.9 trillion). The firm maintained a “Strongly Bullish” rating and raised its target price from NT$3,250 to NT$3,330, ranking fourth highest among domestic and foreign institutional investors.
Prior to this, Aletheia Capital had already set a target price of NT$3,500 for TSMC, while Macquarie Securities raised its target to NT$3,380. The competition among foreign institutional investors over TSMC target prices has fully heated up. As the earnings call approaches, the market is closely watching whether TSMC’s management will release a more optimistic full-year growth guidance, as well as the specific contours of advanced process price increases and capital expenditure expansion.
Institutional investors noted that TSMC’s third quarter will benefit from the volume production ramp of Nvidia’s next-generation AI GPUs, AMD, and cloud service provider (CSP) custom ASICs, coupled with the start of the annual smartphone component stocking season. US dollar revenue is expected to once again refresh historical highs, and the full-year US dollar revenue growth rate has a chance to exceed the company’s previously forecasted 30% or more.
Overall, the intensive target price upgrades by the foreign institutional investor community on the eve of the earnings call reflect the market’s high confidence in long-term AI demand and recognition of TSMC’s dominant position in advanced process technology. As the scale of capital expenditure continues to expand and the pace of capacity expansion accelerates, TSMC’s growth trajectory over the next few years will become a key bellwether for the global semiconductor industry.