Taiwan Semiconductor (TSM) Stock Soars 83% — Bernstein Says Rally Isn’t Over Yet

Key Takeaways

• Bernstein upgraded TSMC’s price target to NT$2,200 from NT$1,800
• Analysts forecast AI-driven revenue will surpass 20% of total sales by 2026, compared to 18% in 2025
• The chipmaker authorized $44.96 billion in capital spending focused on AI chip capacity expansion
• February sales reached NT$317.6 billion — marking a 22.2% increase year-over-year
• Revenue for the first two months combined rose approximately 30% compared to last year’s equivalent period

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Taiwan Semiconductor’s board has authorized a massive $45 billion capital spending program while Bernstein elevated its price outlook amid rising AI revenue forecasts.

Taiwan Semiconductor Manufacturing Company Limited, TSM

The world’s leading contract chipmaker posted February sales of NT$317.6 billion, representing a 22.2% gain versus the prior year. While this marked a roughly 21% decline from January’s tally, such monthly fluctuations are typical seasonal movements and don’t signal any underlying weakness.

Taking a broader view reveals an even more impressive trajectory. Cumulative revenue across January and February 2026 surged approximately 30% when compared to the corresponding months in 2025. The primary catalyst? Surging demand for high-performance computing and artificial intelligence chips from major customers including Apple, Nvidia, and AMD.

According to Bernstein’s research team, AI-linked revenue streams will exceed 20% of TSMC’s overall sales by 2026. That represents an expansion from the projected 18% contribution in 2025. Moreover, the AI revenue story extends beyond traditional logic processors.

TSMC now generates additional AI-related income through High Bandwidth Memory (HBM) base dies — the foundational substrate layer used in HBM chip stacks. This relatively recent revenue stream creates another growth avenue in the expanding AI ecosystem.

Analyst Firm Lifts Valuation Target

Based on these favorable dynamics, Bernstein elevated TSMC’s price objective from NT$1,800 to NT$2,200. The firm cited robust AI growth momentum combined with resilient non-AI demand as the dual factors justifying the increased valuation.

Demand from non-AI segments remains solid as well. Premium smartphone production continues to provide steady support on that front. Bernstein further observed that should any non-AI customers reduce their orders, AI-focused clients — currently experiencing capacity constraints — stand ready to quickly fill that production space.

This balanced supply-demand equation provides TSMC with valuable flexibility. A potential slowdown in either category can be effectively offset by strength in the other.

Massive $45 Billion Investment Authorization

TSMC’s board of directors approved $44.96 billion in fresh capital expenditures. These funds will be deployed toward cutting-edge manufacturing processes, advanced packaging technologies, specialty process nodes, and construction of new fabrication facilities.

This substantial investment represents an offensive strategy rather than a defensive posture — it’s a calculated response to persistent customer demand. The company is proactively building production capacity today to meet anticipated orders tomorrow.

Shareholders also have something more tangible to look forward to in the near term. TSMC announced a Q4 2025 cash dividend of $0.9503 per American Depositary Share, scheduled for distribution on July 9, 2026, to investors recorded as shareholders by June 11, 2026.

TSM stock has appreciated more than 83% during the trailing twelve-month period, finishing last Friday’s session at €295.50.

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