This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
Booming demand for AI products has led Bernstein to raise their share price targets for the Taiwan Semiconductor Manufacturing Company (TSMC). According to Bernstein, who raised TSMC's share price target to $200 from $150, TSMC is facing strong demand for its N3 semiconductor technology. Coupled with strong demand for smartphone processors and a growth in packaging capacity should enable TSMC to grow its revenue next year and outpace estimates for the third quarter believes the firm. The price upgrade follows multiple reports from Taiwanese supply chain sources, which have claimed that TSMC is increasing its packaging and leading edge process prices due to robust demand trends.
Bernstein Surprised By Strong Smartphone AI Demand - Increases TSMC Share Price Target
The share price target hike is based on several assumptions on Bernstein's end. The firm believes that TSMC's 3-nanometer and 5-nanometer capacity is full, and it will allow TSMC to beat its guidance for the third quarter and grow its full year revenue by 25%. The firm adds that while demand for data center AI products is strong, it was surprised by "AI driving an upward shift" in the demand for smartphone products.
As opposed to data center AI products, which revolved primarily around heavy-duty accelerators designed by firms like NVIDIA, Intel and AMD, smartphones use AI processors called neural engines. While AI is a relatively new trend in the technology industry, firms such as Apple have included these 'engines' in their products for quite some time to help the devices with image processing and other functions.
Sepaking of which, a key portion of Berntein's TSMC share price upgrade relates to Intel. The world's largest chip manufacturer is ramping up its own manufacturing processes, and in the meantime, it has outsourced some of its production to TSMC.
According to the firm, an expedited launch of Intel's Lunar Lake products and a price hike can lead to TSMC's earnings per share growing by an additional 26% in 2026. Lunar Lake should also increase the demand for TSMC's N3 and N6 products, and even though Intel will shift the production of the compute tile for its Panther Lake platform to its own 18A manufacturing process, TSMC should retain demand for other Intel tiles. It adds that another strong TSMC customer for its N2, or 2-nanometer, chip technologies will be AMD which will join Apple as an "early user."
TSMC's advanced and performance plus efficiency variants of the N3 technology called N3P and N3E should also see a price hike due to customers other than Apple relying on the technologies. Bernstein sets TSMC's forward price to earning ratio at 20x, which leads it to set a share price target of NT$1,080 or $200 for the firm.
TSMC's 2025 revenue growth of 20% will be accompanied by a 26% EPS growth due to the N3 process becoming more efficient believes Bernstein. Another area that will help with revenue growth will be CoWoS packaging, which should allow TSMC to benefit from higher wafer revenue due to increased demand.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
Follow Wccftech on Google to get more of our news coverage in your feeds.
