TSMC Surpasses Trillion-Dollar Valuation Amid AI Frenzy

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A landmark in corporate history has been reached as Taiwan Semiconductor Manufacturing Company (TSMC) crosses the trillion-dollar market capitalization threshold. This surge prompts a critical market debate: is the artificial intelligence boom fueling a dangerous overvaluation, or does a substantial price target upgrade from Goldman Sachs signal the dawn of a new growth phase? The company's fully booked order schedule for the coming years offers a compelling argument.

The catalyst for the recent buying frenzy was a decisive re-rating by Goldman Sachs. The firm's analysts aggressively raised their 12-month price target by 35% to 2,330 Taiwan dollars, which equates to approximately $466 for the company's US-listed American Depositary Receipts (ADRs). This revision is rooted in a fundamental supply-demand imbalance: the appetite for advanced AI chips currently far outstrips available production capacity. According to the investment bank, this shortage is projected to persist well into 2027, granting TSMC significant pricing power.

Market reaction was immediate. Shares in Taipei soared 6.9% yesterday to a record high of 1,670 Taiwan dollars, propelling the US-listed ADRs to nearly $330 at the opening bell. To meet the insatiable global demand for computing power, the chipmaker has outlined colossal capital expenditure plans, with $150 billion earmarked for new capacity investments between 2026 and 2028. Despite this staggering outlay, industry observers anticipate the company will maintain gross profit margins structurally above 60%.

Capacity Constraints and the CES Catalyst

Further momentum is being provided by the commencement of the Consumer Electronics Show (CES) in Las Vegas. As the exclusive manufacturer for industry leaders like Nvidia and Apple, product announcements from these clients during the event directly influence sentiment toward TSMC. Analysts note that production lines for the most advanced 3-nanometer and 5-nanometer chips are already operating at full capacity, reinforcing the thesis that AI will serve as a multi-year growth engine.

The current market environment is pricing in a scenario of sustained industry dominance. With a forecasted revenue growth of 30% for the current year and confirmed sold-out capacity for years ahead, the valuation appears fundamentally supported despite the recent rally. The path toward the new $466 price target is now seen as primarily dependent on the flawless execution of TSMC's massive expansion strategy.