Key Takeaways
JPMorgan on Wednesday boosted its price target on Taiwan Semiconductor Manufacturing Co. (NYSE: TSM), citing “squeezed” capacity for its advanced chips amid booming artificial intelligence demand that it expects will drive gross margins above expectations.
The bank’s analysts said in an April 3 report that they see a significant, unexpected rise in TSMC’s gross margins for the first and second quarters of 2026, driven by a tight supply of 3-nanometer chips, high capacity use, and demand for rush orders.
The research note raised the 2026 year-end price target for TSMC’s Taipei-listed shares to NT$2400 and increased earnings per share forecasts by 4 percent for 2026 and 6 percent for 2027. JPMorgan sees second-quarter revenue growing 6 to 8 percent sequentially, with the main constraint being 3nm production capacity. The stock opened Wednesday in New York at $337.90.
The bullish call reinforces a wave of positive sentiment for the world’s largest chip foundry, which has become a critical chokepoint in the AI supply chain. Institutional investors have been increasing their positions, with hedge funds owning 16.51 percent of the company’s stock, according to recent filings.
JPMorgan’s positive outlook follows several other bullish analyst actions earlier in the year. In January, Barclays lifted its price target on the U.S.-listed shares to $450 from $380, implying roughly 33 percent upside from current levels. The consensus rating among analysts is a “Buy” with an average price target of $391.43.
The upbeat margin forecast from JPMorgan is supported by fundamental developments. TSMC recently won approval from Japan to build a $5.26 billion factory for 2-nanometer and 3-nanometer AI chips, diversifying its manufacturing footprint. The company has also reportedly begun ramping up production of its next-generation 2nm chips to meet record demand from AI and data center customers.
Recent filings show significant institutional buying. Dock Street Asset Management Inc., for example, increased its stake by 43.8 percent in the fourth quarter. The purchase of 49,698 shares brought its total holdings to 163,198 shares, valued at nearly $49.6 million and making TSMC its sixth-largest position.
The positive analyst sentiment is underpinned by strong execution, with TSMC reporting earnings of $3.11 per share on $30.65 billion in revenue in its last quarterly report, achieving a net margin of 45.13 percent.
The report suggests management will provide a positive outlook on AI and iPhone-related demand during its next earnings call, which would help offset any softness in the PC and Android smartphone markets. While a formal guidance upgrade may not come until the second-quarter report, the qualitative commentary will be closely watched.
This report reinforces the thesis that TSMC's technological leadership provides significant pricing power in the current AI-driven semiconductor cycle. Investors will look for confirmation of these margin trends in the company's upcoming first-quarter earnings release and subsequent conference call.
This article is for informational purposes only and does not constitute investment advice.
