Taiwan Semiconductor (TSM) Stock: UBS Sees 14% Upside as AI Demand Surges

TLDR

• UBS raised its TSMC price target to T$3,400 from T$3,000 and kept its Buy rating
• Q2 2026 earnings are due July 16, with EPS expected at $3.80 vs $2.47 a year ago
• Revenue is forecast at ~$40 billion, up from $30.07 billion in Q2 2025
• UBS expects TSMC to increase capital spending through 2026–2028 to ease supply concerns
• TSM stock has gained over 40% year-to-date; average analyst target implies 14.3% upside

Taiwan Semiconductor Manufacturing (TSM) got a vote of confidence from UBS on Monday, with the bank hiking its price target and standing firm on its Buy rating, just weeks before TSMC reports its Q2 2026 results.

Taiwan Semiconductor Manufacturing Company Limited, TSM

TSM was trading around $432 on Monday, down 0.61% on the day.

UBS raised its price target on the Taiwan-listed stock to T$3,400 from T$3,000. The bank cited strong AI chip demand and an improving growth outlook as the main drivers behind the upgrade.

TSMC is set to report Q2 2026 earnings on July 16. Wall Street is expecting EPS of $3.80 per ADR unit, up sharply from $2.47 in the same quarter last year. Revenue is forecast at around $40.04 billion, compared to $30.07 billion in Q2 2025.

That would represent roughly 33% revenue growth year-over-year — not bad for the world’s most important chipmaker.

Earlier this month, TSMC reported May 2026 revenue of T$416.98 billion, up 30.1% year-over-year. CEO C.C. Wei described demand for AI chips as “extremely robust,” and the company said it expects 2026 capital spending to land near the top of its $52 billion to $56 billion guidance range.

Why UBS Is Bullish

UBS analysts said they expect TSMC to keep lifting capital expenditure from 2026 through 2028, expanding production capacity to meet surging AI-related demand.

The bank flagged that higher capex is “critical to alleviating client concerns around supply constraints and the need for second-source diversification.” In other words, customers want more chips and they want backup options — TSMC needs to deliver on both fronts.

UBS also said it expects growing demand across CPUs, AI accelerators, and edge AI devices to push further expansion at the company. The bank added that TSMC could raise chip prices as early as the first quarter of 2027, which would further support its revenue outlook.

The brokerage upped its 2026 revenue forecast for TSMC as part of the note, and said growth momentum should continue well beyond this year.

What to Watch at Q2 Earnings

UBS is looking for TSMC to lay out its capital spending roadmap in more detail during the July 16 earnings call.

The bank also wants to hear how management plans to respond to growing competition from Samsung Foundry, Intel, and a newer entrant, Terafab.

TSMC has been ramping up capacity at a pace that few rivals can match, but investors will be watching closely for any commentary on whether that lead is being maintained.

According to TipRanks, TSM carries a Strong Buy consensus rating, based on five Buy ratings and one Hold over the past three months. The average price target of $494.17 implies around 14.3% upside from current levels.

TSM stock is up more than 40% year-to-date.

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