TSMC hits a new all-time high of 1705, with foreign investors' target price reaching up to 2400 yuan

Taiwan Semiconductor Manufacturing Company (TSMC) (2330) today (1/6) once again hit a new all-time high, closing at 1705 NT dollars. Foreign investors have been raising their target prices, with the highest reaching 2400 NT dollars. Renowned financial YouTuber You Tinghao provides an in-depth analysis, examining the transformation of AI revenue structure and ETF market effects, to interpret TSMC’s future competitive advantages and potential challenges.

AI Revenue Share Surge and Profit Structure Transformation

TSMC’s operational profile is undergoing a structural shift, moving away from reliance on consumer electronics (such as iPhone) toward high-performance computing (HPC) and AI at its core. It is estimated that by 2027, AI-related revenue will increase from the current 20% to 40%, directly driving upward revisions of profit expectations.

Additionally, in the advanced packaging capacities of 2nm and CoWoS, TSMC is expanding production at a rate of 40-50% annually. This not only widens the technological gap with Intel and Samsung, which has been 10 years in the making, but also creates a very high entry barrier for competitors.

The future challenges for TSMC are not from competitors catching up but stem from its own dominant market position, which triggers regulatory pressures, and the cyclical risks associated with heavy dependence on a single industry (AI).

Foreign Investors Raise TSMC Target Prices, Highest Reaching 2400 NT Dollars

Due to optimism about the long-term structural growth driven by AI, some foreign institutions have set new high target prices for TSMC:

Aletheia Capital is the most aggressive, raising its year-end target price from NT$2,100 to NT$2,400. Goldman Sachs has increased its target from NT$1,720 to NT$2,330.

These high target prices are not arbitrary but are based on optimistic forecasts of EPS (earnings per share) over the next three years, implying that the market is “valuing current stock prices based on future profits”:

EPS Growth Estimates:

2026: Estimated NT$97

2027: Estimated NT$120

Using the target price of NT$2,400 and the estimated EPS of NT$120 in 2027, the forward P/E ratio is approximately 20 times, which is not considered too expensive.

ETF Market’s “Passive Buying” Spillover Effect

You Tinghao also points out a unique capital circulation phenomenon in the Taiwanese market: active funds, in pursuit of outperforming the market, are limited by single-stock holdings caps (usually 10%), and thus turn to purchase “passive ETFs” with high TSMC weights (such as 0050, 0052). This causes capital to layer upon layer, creating an endless cycle of “active funds buying ETFs, ETFs buying TSMC.” This index-driven buying further consolidates TSMC’s shareholding structure, making its position in the index more difficult to challenge, and intensifies the “winner-takes-all” situation where small and medium-sized stocks find it hard to outperform the market.

This article “TSMC hits a new high of 1705, with foreign investors’ target price reaching 2400 NT dollars” first appeared on Chain News ABMedia.