Key driving force in the field of AI! JP Morgan raises the target price of TSMC (TSM.US) to 850 New Taiwan Dollars.

Due to the expected increase in revenue from AI, J.P. Morgan has raised the target price for Taiwan Semiconductor (TSM.US) from 770 Taiwanese dollars to 850 Taiwanese dollars. Analyst Gokul Hariharan and his team believe that Taiwan Semiconductor will become a key driver for almost all artificial intelligence processing in data centers and at the edge, with significant growth in artificial intelligence expected in the next three to four years. J.P. Morgan pointed out that by 2027, the risk exposure of AI will rise to 25%. The role of Taiwan Semiconductor as a key driver of AI semiconductors is becoming increasingly clear, as multiple graphics processing units (GPUs), application-specific integrated circuits (ASICs), and edge AI processor programs are expected to accelerate in development by 2024 and grow even faster in 2025. Analysts believe that by 2027, as edge artificial intelligence also begins to make meaningful contributions, overall revenue related to artificial intelligence will soar to 25%. Hariharan believes that in the next three to four years, Taiwan Semiconductor will maintain a market share of over 90% in all AI-related chips, and by 2027, AI-related revenue will grow to 25% of the company's total revenue (19% from data center AI, the rest from edge AI). J.P. Morgan stated that with tightly integrated packaging technology, leading process technology, and the support of the semiconductor industry's most extensive IP and design services ecosystem, Taiwan Semiconductor's moat in the AI semiconductor field seems wider than previous product cycles. They also see signs from the supply chain that Intel will outsource to Taiwan Semiconductor in the N3 era, which should drive strong growth in 2025-26. Hariharan believes that with significantly increased customer participation, Taiwan Semiconductor may continue to maintain its leading position in the N2 manufacturing technology era. Analysts have slightly raised their expectations for the fiscal year 2025 and anticipate that the company's profitability will reach 55-60 New Taiwan dollars in 2026 as revenue continues to grow, and early revenue and gross margins may reach mid-to-late 50% levels.