A $90 Billion Reason to Buy This AI Stock Now
Taiwan Semiconductor Manufacturing (TSM) has been making buzz in the market with its stock ticked higher last week as analysts outlined a clear path to $90 billion in AI-driven sales by 2029. Whether or not this trajectory seems to be practical, the report has surely brought a sharp surge in the price of the share.
Needham analyst Charles Shi maintained a “Buy” rating for the stock of the world’s largest contract chipmaker while upgrading his price target for the stock to $275 FROM $225. According to Shi, the TSMC stock can achieve this revenue target without any significant revenue increases. On the other hand, the company might rely more on higher silicon content per package along with the customized high-bandwidth memory solutions.
The company plans for the volume production of 2-nanometer chips in the second half of 2025 to capitalize on the demand for semiconductor chips in the next generation. The foundry of TSM plans to double both its chip-on-wafer-on-substrate (CoWoS) packaging capacity and AI-related revenue in 2025.
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However, Shi has also warned about the potential headwinds in 2026 as the AI accelerator volumes might slow down. However, 2027 is expected to bring a strong recovery along with a 40% growth, followed by 45% growth in 2028. The advanced architecture around the world requires higher silicon content with further support for this growth prediction.
AI Stocks: A Strong Performance in Q1 2025
Taiwan Semiconductor Manufacturing have delivered some excellent results in the fist quarter of the year which increases the profit expectations of investors. The performance of the compay in first quarter positions it as the leading contract chipmaker in a world with surging demand. The foundry reported net income of $10.97 billion which is a 60% increase from the last year.
The company has also portrayed a strategic growth foresight by expanding its operations to the USA. Moreover, additional $100 billion investment in Arizona facilities has also been announced by TSM that adds up to total US commitment, making it $165 billion.
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However, the gross margins seem to face pressure in the future due to the overseas facility startup costs, where the margins might drop from 58.8% to 58% in the second quarter. Still, the long-term strategic positioning of the company seems to support long-term growth as AI is already reshaping the semiconductor landscape.
