TSM Seen as a “Quality Compounder” With Multi-Year AI Upside, Says Bernstein

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the Trending AI Stocks on Wall Street. On December 8, Bernstein SocGen Group raised the price target on the stock to $330.00 from $290.00, while maintaining an “Outperform” rating. The firm sees TSM as a “quality compounder” driven by CoWoS ramp, AI demand, and pricing power across nodes.

According to the firm, increased CoWoS (Chip on Wafer on Substrate) capacity will serve as a major driver for revenue growth toward Taiwan Semi’s 5-year AI target.

The firm has raised TSMC CoWoS capacity to 125K wpm by the end of 2026, combined with contributions from OSATs (Outsourced Semiconductor Assembly and Test providers). This will bring the total CoWoS capacity to 1250K/yr in 2026.

A stock market graph. Photo by energepic.com

Bernstein believes that these numbers will be sufficient to support the recently announced projects, including an estimated $0.5 trillion from Blackwell and Rubin for NVIDIA in 2025 and 2026.

The firm also noted improving mature-node demand, while stating that that N2 node development and price increases on N3/5 nodes will support smartphone revenue.

Based on these factors, the firm anticipates TSMC’s revenue to grow 23% this year and 20% in 2027.

“Outperform with 1-year price target at NT$1,800.00 on 20x forward P/E. We’re slightly above consensus on revenue, a tad below on margins, but 5% above on EPS. We view TSMC a quality compounder and a core holding for investors.”

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures and sells advanced chips used in artificial intelligence applications.

While we acknowledge the risk and potential of TSM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TSM and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 10 AI Stocks Making Headlines on Wall Street and 12 Must-Watch AI Stocks on Wall Street

Disclosure: None.