Taiwan Semiconductor (TSM) Stock: Goldman Sachs Predicts Massive Upside as AI Chip Crunch Reaches Fever Pitch

The AI arms race just found its ultimate bottleneck—and its biggest winner.

Goldman Sachs is pounding the table on Taiwan Semiconductor (TSM), forecasting a massive upside as the scramble for advanced AI chips intensifies. Forget software—the real battle is being waged in the foundries.

The Silicon Gatekeeper

TSMC isn't just a supplier; it's the sole gatekeeper for the world's most advanced semiconductors. Every major AI player—from Nvidia to the hyperscalers—is knocking on its door. Demand isn't just surging; it's colliding with brutal physical constraints.

Building leading-edge fabs takes years and tens of billions. For now, TSMC holds the keys.

Crunch Time for Compute

The AI boom created a compute drought. Startups can't get enough H100s, and even tech giants are rationing access. This scarcity funnels directly into TSMC's order book, creating a pricing power scenario that would make any monopoly blush.

Capacity is sold out years in advance. Goldman's bullish call isn't about potential; it's about the inevitability of the backlog.

The Financial Engine

This isn't just a tech story; it's a cash flow machine. Premium nodes command premium prices, and TSMC's margins are set to expand as the crunch worsens. The firm's capex is staggering, but so is the return on that bet.

While venture capitalists chase the next AI app, the smart money is backing the picks-and-shovels provider—the one charging admission to the gold rush. A classic case of selling the shovels in a frenzy, proving once again that in a hype cycle, the infrastructure plays often win. The financiers love a good bottleneck—it's easier to model than disruption.

The chip shortage won't end soon. And as long as AI needs more silicon, TSMC won't just be a player—it will be the house. Place your bets accordingly.

TLDR

• TSMC shares jumped 6.9% to a record high after Goldman Sachs raised its price target by 35% to NT$2,330
• Goldman expects AI demand to drive capacity tightness through 2027 and projects TSMC will spend $150 billion on expansion from 2026-2028
• The investment bank now forecasts TSMC revenue growth of 30% in 2026 and 28% in 2027, up from previous 22% estimates
• TSMC’s gross margins are expected to stay above 60% through 2028 despite heavy capital spending
• The stock gained 44% in 2025, pushing the company’s market value above $1 trillion for the first time

TSMC shares climbed as much as 6.9% Monday, marking the biggest single-day gain since April. The rally pushed shares to a new record high in Taipei trading.

Taiwan Semiconductor Manufacturing Company Limited, TSM

Goldman Sachs triggered the MOVE by raising its price target to NT$2,330 from NT$1,720. The firm maintained its Conviction Buy rating on the stock.

The chipmaker led a broad rally in Asian tech stocks as investors poured money into AI-related companies. TSMC helped drive Taiwan’s Taiex index above 30,000 for the first time ever.

Goldman analysts led by Bruce Lu called AI “a multi-year growth engine” for TSMC. The firm now expects the company to deploy more than $150 billion in capital spending between 2026 and 2028.

That’s a lot of cash for building new factories and buying equipment. But Goldman thinks it’s necessary to meet exploding demand for AI chips.

Capacity Crunch Expected Through 2027

The investment bank projects TSMC’s advanced 3nm and 5nm production lines will remain tight through 2027. Token consumption in AI applications is growing so fast that silicon demand will outpace supply.

Goldman raised its revenue growth forecasts for TSMC. The firm now expects 30% growth in 2026 and 28% in 2027, both measured in dollar terms. Previous estimates called for 22% growth in each year.

TSMC supplies chips for major customers including Nvidia and Apple. The company holds a dominant position in contract chipmaking, especially for cutting-edge semiconductors.

Margins Stay Strong Despite Spending Spree

Goldman expects TSMC’s gross margins to reach and hold above 60% from 2026 through 2028. That’s impressive considering the company will be spending heavily on new facilities.

The firm cited mild dilution from overseas factories and continued productivity improvements. TSMC is expanding production beyond Taiwan but keeping efficiency high.

Goldman also boosted its forecasts for CoWoS shipments, a packaging technology used in AI chips. The bank now expects 1.185 million wafers in 2026 and 2.195 million in 2027.

TSMC’s stock surged 44% in 2025. The rally pushed its market value above $1 trillion for the first time. That makes it one of the world’s most valuable companies.

Other Asian chip stocks also rallied Monday. Samsung Electronics extended gains to a fifth straight session. Japanese equipment makers Tokyo Electron and Advantest each jumped more than 7%.

Sanford C. Bernstein analysts said TSMC’s capacity is “king” for leading-edge semiconductors. Most of the world’s top chip companies rely on its manufacturing services.

TSMC reports quarterly earnings on January 15. The results will give investors a clearer picture of AI demand heading into 2026.