Goldman Sachs Boosts TSMC Rating, Cites AI Chip Demand

2025-06-27 tsmc

new york, Friday, 27 June 2025.
Goldman Sachs has added Taiwan Semiconductor Manufacturing Company to its ‘conviction buy’ list, projecting a target price of NT$1,210. This decision is fueled by easing concerns about AI order cuts and TSMC’s crucial role in the AI sector. Goldman Sachs anticipates strong performance due to TSMC’s strategic position in the artificial intelligence market. The firm expects TSMC to benefit from increased demand for its CoWoS chip packaging, driven by applications beyond AI, forecasting significant growth in both shipments and production capacity through 2027.

Revised earnings forecasts

Goldman Sachs has increased its earnings forecasts for TSMC from 2% to 6% for the years 2025 through 2027 [2][4]. This revision is based on increased revenue projections for 3nm and 5nm wafers [2][4]. The firm also notes a reduced concern regarding potential cuts in AI orders [2][4]. Increased adoption rates among customers are also driving higher forecasts for CoWoS chip packaging demand [2][4].

CoWoS demand and capacity

Goldman Sachs projects increased CoWoS shipments, raising estimates from 585,000-1,287,000 units to 664,000-1,566,000 units for 2025-2027 [2][4]. Correspondingly, CoWoS capacity forecasts have been adjusted upwards from 600,000-1,410,000 units to 675,000-1,740,000 units during the same period [2][4]. This sustained demand is expected to be fueled by the expanding application of chip designs in smartphones, servers, networking, and other non-AI sectors [2][4].

Capital expenditure adjustments

In line with rising CoWoS demand, Goldman Sachs has increased its capital expenditure forecasts for TSMC by $2 billion for both 2026 and 2027 [2][4]. The revised capex estimates are now $42 billion for 2026 and $50 billion for 2027 [2][4]. TSMC’s advanced manufacturing processes are expected to drive higher blended average selling prices, benefiting from the migration of AI clients from 4nm to 3nm processes [7].

Analyst perspectives and ratings

Other analysts share a positive outlook on TSMC. Citigroup raised its target price to NT$1,280, reaffirming a ‘buy’ rating [3][5][8]. Citigroup noted TSMC’s revenue for the first five months of the year increased by 43% in NT$ terms [3][5][8]. This compares favorably to the guidance of a 20%-30% increase in US$ terms [3][5][8]. Morgan Stanley has an even higher price target of NT$1,288, with analyst James Jen recently reiterating his expectation of strong AI demand through 2026 [7].

Factors driving optimism

Goldman Sachs’ optimism is based on improvements in the supply chain and a reduced likelihood of further AI order reductions [7]. Demand for CoWoS is expanding beyond AI to smartphones, servers and networking [7]. More AI clients are upgrading from 4nm to 3nm processes, while non-AI clients in smartphones and computers are moving to 2nm [7]. Advanced processes and CoWoS are expected to see another round of price increases [7].

Bronnen

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