Goldman Sachs Raises TSMC Price Target Ahead of Earnings, US Stock Target at $660
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Ahead of TSMC's Q3 results on October 15, Goldman reaffirmed its Buy rating and lifted the US ADR target to $660, implying roughly 40% upside — driven by AI demand running stronger than expected and less margin dilution from next-gen process ramps.
What price did Goldman set, and how much upside does it imply?
Taiwan-listed shares: target raised from NT$3,100 to NT$3,300, about 28% above last Friday's close.
US ADR target lifted to $660, about 40% above last Friday's close. Rating stays at Buy.
This means → Goldman sees the current price as far from reflecting TSMC's earnings growth over the next two years, especially the AI-driven upside.
What do Q3 and Q4 numbers look like?
Goldman forecasts Q3 revenue rising 15.3% quarter-on-quarter and Q4 up another 11.0% QoQ, both in USD terms, powered by sustained AI and high-performance computing (HPC) demand.
Gross margin is expected to dip slightly to 67.5% in Q3 and 67.3% in Q4, down from 67.7% in Q2.
In plain terms = revenue is accelerating while margins edge down — the cause is the N2 node ramp. New production lines naturally dilute overall margins during the early scale-up phase.
Why were multi-year earnings forecasts also raised?
Goldman lifted TSMC's EPS estimates for 2026, 2027, and 2028 by 1%, 7%, and 8% respectively.
Two reasons: first, N2 ramp dilution on gross margin is smaller than previously feared; second, AI/HPC demand is stronger, especially on N2 and N3 nodes, pushing utilization-rate assumptions higher.
This means → Goldman isn't just bullish on one quarter — it believes AI demand is strong enough to support three consecutive years of earnings upgrades.
Can growth extend into 2027? What's the new CPU variable?
Goldman raised its 2026 revenue growth forecast to 42.0% year-on-year and 2027 to 36.9% (up from 32.0%).
The key new variable: CPU demand driven by agentic AI — a force that has strengthened markedly over the past year. At Goldman's tech conference, TSMC management stressed that lower token costs should further stimulate AI usage.
Despite ongoing capacity expansion, management still expects N2 and N3 supply to remain tight. This reflects demand growth still outpacing the capacity build-out.
How much capex is planned? Is US expansion the focus?
Goldman keeps its 2026 capex estimate at $64 billion but raises 2027 and 2028 to $85 billion and $98 billion respectively (previously $78 billion and $82 billion).
The increase reflects equipment-supplier cost inflation and potential initial spending on a new Texas fab — though Goldman expects that site won't reach volume production until after 2032.
In plain terms = TSMC plans to spend nearly $250 billion over three years building capacity. US expansion is the variable markets care about most — how much, where, and when each site goes live will directly shape the stock's long-term valuation.
What will markets watch on earnings day?
The market will focus on management's latest view of AI demand through 2030 and the long-term capex trajectory.
Another focal point: whether TSMC might expand US operations beyond its existing Arizona site.
This means → this earnings call isn't just about the numbers — management's commentary on AI demand durability and the pace of US expansion will directly influence how the market prices TSMC's long-term growth path.
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