Foreign media analysis: TSMC is expected to become the biggest winner in the AI chip market in 2027

TSMC has a high degree of advantage in advanced logic chip manufacturing.

[Financial Channel/Comprehensive Report] AI continues to drive global semiconductor demand, with NVIDIA, AMD and Broadcom becoming the focus of market attention. However, analysis by foreign media "The Motley Fool" believes that the one that may really be ahead of these major AI chip manufacturers in 2027 may be TSMC. The analysis pointed out that as the AI ​​data center continues to expand and wafer foundry prices increase, TSMC may enjoy the double benefits of "volume increase and price increase" next year and will become the biggest winner in 2027.

According to reports, market research company Gartner predicts that global semiconductor industry revenue will reach US$1.6 trillion this year, a 92% increase from last year; it is expected to further increase to US$1.9 trillion in 2027, maintaining double-digit growth.

The proportion of AI data centers in the semiconductor market also continues to increase. Gartner predicts that AI data centers will account for 53% of global semiconductor industry revenue in 2030 from 36.5% in 2026. This trend is beneficial to AI chip manufacturers such as Huida, AMD and Broadcom, but foreign media analysts believe that TSMC may also become an important beneficiary.

TSMC adopts a pure foundry model and manufactures chips for customers such as Huida, AMD and Broadcom. With a market share of approximately 73% in the pure wafer foundry market, TSMC has considerable bargaining power.

The report pointed out that TSMC’s customers have been raising product prices recently, partly to reflect the increase in chip manufacturing costs. For TSMC, higher selling prices from customers could be another positive thing. The reason is that even if chip prices increase, demand is still supported by the expansion of AI data centers. TSMC has the opportunity to benefit from both increased shipments and rising wafer foundry prices.

In addition, TSMC expects to increase chip manufacturing costs by 10% starting from 2027; for customers who place orders in excess of the initially committed quantity, it is reported that they may also charge prices that are 10% to 15% higher.

As the AI ​​market continues to expand, Huida also estimates that the serviceable market size of its AI chips will reach US$1 trillion next year, which is twice its estimated market opportunity in 2026. This means that even if chip prices increase, AI-related demand may continue to bring huge business opportunities to the supply chain.

Market analysts currently expect TSMC's earnings per share (EPS) to increase from US$16.93 in 2026 to US$21.93 in 2027, an annual increase of approximately 29%. However, the report believes that if TSMC benefits from rising prices and increased shipments, actual profit growth may be higher than the market's current expectations.

Assuming that TSMC's profit growth reaches 40% in 2027, based on the estimated EPS value of US$16.93 in 2026, EPS may reach US$23.70.

In terms of valuation, TSMC's current expected price-to-earnings ratio is about 21 times, which is lower than the average price-to-earnings ratio of the Nasdaq Composite Index of about 39 times; AMD's is about 40 times, and Huida's is about 25 times. The report further assumes that if TSMC's profit growth exceeds market expectations, the market is willing to give a price-to-earnings ratio of 30 times. Based on an EPS of US$23.70, the ADR stock price will reach approximately US$711.

After conversion, it is estimated that TSMC's stock price still has about 56% potential upside potential. However, this figure is based on the assumption that "EPS will reach US$23.70 in 2027, and the market gives a price-to-earnings ratio of 30 times." It is an estimate and not a definite stock price target.

Against the background of continued increase in AI demand, rising wafer foundry prices and growth in shipments, whether TSMC can deliver results that exceed market expectations in 2027 will become the focus of investors' attention.