Bank of America analysts have revised their target price on Taiwan Semiconductor (TSM), citing the company’s pivotal role as a “key enabler of AI with long-lasting leadership.” The target price has been increased to NT$880 from NT$760, reflecting the analysts’ expectations of robust demand for structural advanced node technologies, particularly driven by the increasing requirements in AI computing power and energy efficiency.
Support from AI strength and computing power
The upward adjustment in the target price is underpinned by the anticipation of heightened demand for structural advanced nodes, which are crucially supported by AI strength, computing power, and energy-saving requirements.
Analysts foresee a significant uptick in the importance of advanced nodes due to the escalating computing power demands brought about by AI applications. This sentiment resonates with the positive outlook of industry figures such as OpenAI CEO Sam Altman and TSMC founder Dr. Morris Chang.
Furthermore, advanced nodes are poised to play a pivotal role in addressing the surging electricity demand associated with the rapid expansion of AI and computing technologies. Utilizing advanced nodes is a strategic measure to mitigate the escalating energy consumption inherent in these technologies.
Projected growth in leading-edge foundries’ revenue
Bank of America anticipates a compound annual growth rate (CAGR) of 22% in revenue from the industry’s leading-edge foundries, particularly those operating at sub-7nm nodes, from 2023 to 2025. This growth projection underscores the increasing significance of advanced node technologies in meeting the evolving demands of the semiconductor industry, particularly in the context of AI-driven applications.
Moreover, Intel’s recent strategic decision to outsource the production of Lunar/Arrow Lake CPU tiles to TSMC is expected to further bolster and reaffirm the latter’s leadership position within the semiconductor landscape. This outsourcing arrangement indicates TSMC’s recognized expertise and reliability in delivering cutting-edge semiconductor solutions, particularly in advanced node technologies.
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