TSM Seen as a “Quality Compounder” With Multi-Year AI Upside, Says Bernstein

Core Viewpoint - Taiwan Semiconductor Manufacturing Company Limited (TSMC) is recognized as a leading AI stock, with Bernstein SocGen Group raising its price target to $330.00 from $290.00 while maintaining an "Outperform" rating, citing TSMC's quality as a compounder driven by CoWoS ramp, AI demand, and pricing power across nodes [1]. Group 1: Revenue Growth Drivers - Increased CoWoS (Chip on Wafer on Substrate) capacity is projected to be a significant driver for revenue growth towards TSMC's 5-year AI target, with capacity expected to reach 125K wpm by the end of 2026, contributing to a total CoWoS capacity of 1,250K per year in 2026 [2]. - Bernstein anticipates TSMC's revenue to grow by 23% this year and 20% in 2027, supported by improving mature-node demand and price increases on N3/5 nodes, which will bolster smartphone revenue [3]. Group 2: Financial Projections - Bernstein has set a 1-year price target of NT$1,800.00 based on a 20x forward P/E ratio, projecting revenue slightly above consensus, margins slightly below, but EPS 5% above consensus, reinforcing TSMC's position as a quality compounder and a core holding for investors [4].