Taiwan Semiconductor Manufacturing is proving to be the engine of growth for the artificial intelligence megatrend, making AI chips for Nvidia and a host of other firms. And TSM stock is in record high territory.
On Tuesday, Needham analyst Charles Shi reiterated his buy rating on TSM stock and raised his price target to 270 from 225.
On the stock market today, TSM stock dipped 0.8% to close at 224.68. It hit an all-time high of 228.88 on Friday.
Shi estimates that Taiwan Semiconductor's total revenue will grow from $87.9 billion in 2024 to $114 billion this year, $130 billion in 2026 and $160 billion in 2027.
Meanwhile, the contract chipmaker's AI chip revenue could increase from $26 billion this year to $33 billion in 2026 and $46 billion in 2027, Shi said in a client note.
Taiwan Semiconductor, better known as TSMC, has set a goal of reaching $90 billion in AI chip revenue by 2029.
"We think that TSMC's extremely bullish outlook on AI may in fact be built on a set of conservative assumptions," Shi said.
TSM Stock Is On Three IBD Lists
To reach its AI chip revenue goal, TSMC will need to increase its spending on capital equipment. Needham predicts that TSMC's capex will increase from $40 billion this year to $45 billion in 2026 and $50 billion in 2027.
TSMC makes AI chips for Nvidia, AMD, Broadcom, Marvell Technology and others.
TSM stock is three IBD lists: IBD 50, Global Leaders and Tech Leaders.
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