TSMC (TSM) Re-Rating Possible as AI Drives Chip Demand-Macquarie

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the 10 AI Stocks Investors Are Watching This Week. On July 7, Macquarie raised the stock’s target price from 1,125 New Taiwanese dollars to 1,282 New Taiwanese dollars, maintaining an “Outperform” rating.

The rating affirmation is driven by the burgeoning demand from the AI super cycle. Firm analysts are particularly optimistic about TSMC’s leadership in advanced semiconductor nodes, particularly its N2 technology. The ongoing growth from its N3 nodes is also a positive factor.

Macquarie further analyzed that the “N2 ramp-up is a critical driver,” with design-in activity for N2 already superior to that of N3 at a similar stage. This, in turn, implies robust demand for TSMC’s cutting-edge chips. Consequently, the firm anticipates over 20% YoY USD revenue growth in 2025.

“Robust revenue growth from advanced nodes could partially offset these FX-related headwinds.”

The analysts believe that the demand generated by AI, together with TSMC’s superior technology, could lead to a similar P/E re-rating that happened during the last consumer electronics boom in late 2020. At that time, TSMC’s P/E expanded to 20–25x.

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

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