Goldman Sachs Group, Inc. raises profit forecast for Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US): 3nm/5nm capacity will remain tight until 2027.

On January 4th local time, Goldman Sachs Group, Inc. raised the target price of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) from 1720 New Taiwan dollars to 2330 New Taiwan dollars, while maintaining a "strong buy" rating. The company has also raised its profit forecast for 2026 and 2027 by as much as 15%, thanks to the "long-term growth engine" in the field of artificial intelligence (AI). Analyst Bruce Lui stated that the demand for AI chips is growing exponentially, which means that chip demand will exceed supply. Lui expects Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR to invest over 150 billion US dollars in capital expenditures from 2026 to 2028 to meet the surging demand, including 54 billion US dollars in 2027 when new wafer fabs will start operating. Strong demand is also expected to keep the 3nm/5nm wafer capacity of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR tight before 2027. The company expects revenue to grow by 30% in 2026 and 28% in 2027, higher than the previous annual expectation of 22%. Despite increased capital expenditures and overseas business expansion, the gross margin from 2026 to 2028 is expected to exceed 60%. Stable production rate improvements and the limited dilution effect of overseas factories will drive this growth. The company further raised its forecast, increasing the expected CoWoS shipment volumes for 2026 and 2027 to 1.185 million and 2.195 million wafers respectively, while also raising the CoWoS production capacity expectations to 1.275 million and 2.31 million wafers. This upward revision in forecasts fully reflects the stronger market demand related to the field of artificial intelligence. According to the latest data from Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, revenue in December was 335 billion New Taiwan dollars, a year-on-year increase of 20.4%, down 2.5% from November 2025. Based on monthly data, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR estimated fourth quarter revenue totaled 1.046.08 billion New Taiwan dollars, significantly higher than last year's 868.46 billion New Taiwan dollars and also exceeding the London Stock Exchange Group's 1.0359 trillion New Taiwan dollar forecast based on 20 analysts. Benefiting from strong demand for AI chips from NVIDIA Corporation and iPhone 17, the company achieved a sharp increase in annual revenue of 31.6%, effectively alleviating concerns in the market about the "bubble" in AI infrastructure. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR will release its full quarterly financial report on January 15 and announce its capital expenditure forecast for 2026.