TradingKey - On August 11 Asia-Pacific time, Wall Street investment bank Bernstein released a research report raising its price target for TSMC from NT$2,780 to NT$3,300 ($102.40 equivalent), citing central processing units (CPUs) as expected to become the next growth driver for the global foundry leader.
As of press time, TSMC's Taiwan-listed stock traded at NT$2,395, implying approximately 38% upside to the NT$3,300 price target.
[Source: TradingView]
Bernstein analysts noted in the report that with the rise of Agentic AI earlier this year, the CPU market is expected to accelerate growth. Analysts project that by 2027, TSMC's CPU-related revenue will reach the upper end of the $30 billion range, accounting for 10% to 20% of total revenue.
During the same period, revenue contributions from GPUs and ASICs are also expected to be around $30 billion. This means that in terms of wafer revenue contribution in 2027, CPUs could be as important as AI accelerators such as GPUs and ASICs.
This contrasts with the growth structure over the past few years. TSMC's previous growth mainly relied on GPU and AI accelerator orders, with data center chips from customers such as Nvidia (NVDA) and AMD (AMD) almost entirely manufactured by TSMC. Second-quarter financial results showed that high-performance computing (HPC) contributed 66% of total revenue, with AI computing as the company's primary growth engine.
However, as AI workloads expand from large-scale training to inference and agentic applications, the role of CPUs is being re-evaluated. Agentic AI requires stronger logical reasoning and task scheduling capabilities, where CPUs have an inherent advantage in handling such complex instructions.
Currently, TSMC's CPU foundry customers include Intel (INTC), AMD, and Amazon (AMZN). Among them, AMD's server CPUs and Amazon's Graviton series processors are both produced by TSMC.
Regarding valuation, Bernstein believes TSMC's current stock price remains low compared to peers, and as CPUs emerge as a new growth driver, there is still room for further valuation re-rating.
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