Goldman Sachs Warns Of $150B TSMC Spending Spree To Meet AI Demand

The world's most powerful chipmaker just became considerably more valuable on Wall Street. On Monday morning, investors poured billions into Taiwan Semiconductor Manufacturing Company (TSMC) shares following an extraordinary analyst upgrade that sent ripples throughout Asia's technology sector and cast fresh light on the seemingly inexorable march of the artificial intelligence boom into 2026.

Shares of the Hsinchu-based firm jumped as much as 6.9 per cent to touch a fresh all-time high in Taipei trading. The catalyst was unmistakable: Goldman Sachs Group Inc. had dramatically lifted its price target by 35 per cent to NT$2,330 (approximately $74 USD), signalling breathtaking confidence in the company's growth trajectory.

For context, this new target implies roughly 40 per cent upside from where shares closed on Friday, suggesting that even after spectacular gains, the market's appetite for semiconductor exposure shows no sign of diminishing.​

'We view artificial intelligence as a multi-year growth engine for TSMC,' Goldman Sachs analysts, led by Bruce Lu, wrote in their research note. The firm's reasoning was refreshingly straightforward: capacity remains crushingly tight, demand continues to outpace supply, and there is no indication this dynamic will reverse anytime soon.​

The rally swept well beyond TSMC itself. Across Asia, technology stocks broadly participated in what has become an almost ritual response to any positive signal from the semiconductor complex.

Taiwan's broader Taiex index surged more than 3 per cent to break through 30,000 points for the first time in its history—a psychological barrier that officials here had seemed to regard as almost unreachable mere weeks ago.​

The AI Supercycle Thesis Takes Root

Goldman's upgrade reflects a fundamental reassessment of how long the current artificial intelligence buildout will persist. Rather than viewing 2026 as a potential plateauing year, the bank now forecasts that capacity constraints will remain remarkably tight well into 2027, keeping semiconductor manufacturers perpetually behind the demand curve.

Exponential growth in 'token consumption'—essentially the amount of data flowing through AI systems—is reshaping long-term semiconductor architecture in ways that favour precisely the kind of cutting-edge manufacturing TSMC specialises in.

The investment bank has raised its revenue growth estimates substantially. Where it previously expected 22 per cent expansion in both 2026 and 2027, Goldman now anticipates 30 per cent growth this year and 28 per cent the following year. T

his upgrade comes despite the bank simultaneously forecasting that TSMC will deploy more than $150 billion in capital expenditure between 2026 and 2028 to expand manufacturing capacity.

Most remarkably, analysts expect the company's gross margins will hold above 60 per cent throughout this period—a phenomenon that would suggest either extraordinary pricing power or stunning operational efficiency, most likely both.​

TSMC shares themselves have transformed into something approaching a bellwether for the entire AI investment thesis. In 2025 alone, the company's stock surged 44 per cent, pushing its market capitalisation past the $1 trillion threshold for the first time. Remarkably, this milestone arrived despite the company already being widely acknowledged as the world's most important chipmaker.

The dominance is so pronounced that TSMC's market capitalisation now represents more than 40 per cent of Taiwan's entire equity market capitalisation—a concentration risk that has begun to concern regulators and policymakers.​

The Competition Never Stops

TSMC's peers rode the upgrade wave with equal enthusiasm. South Korea's Samsung Electronics extended its winning streak to a fifth consecutive trading session, building toward preliminary earnings results expected later this week that should shed light on whether the memory chip maker's remarkable valuations can be justified by actual profit growth.​

Japanese equipment manufacturers similarly benefited. Tokyo Electron and Advantest both rose more than 7 per cent, reflecting the reality that their fortunes remain tightly bound to semiconductor capacity expansions worldwide.

Chinese chipmakers gained ground after news that Beijing's integrated circuit investment fund had increased its stake in Semiconductor Manufacturing International Corp., signalling that even amid US-China tensions, technology capital continues to flow toward semiconductor manufacturing.​

More intriguingly, Chinese AI firms signalled a potential shift in competitive dynamics. DeepSeek flagged a more efficient approach to training artificial intelligence models, suggesting that perhaps not all AI progress requires the most advanced manufacturing nodes.

This detail has profound implications for TSMC's business mix, though Goldman's upgrade suggests such concerns remain secondary to the overwhelming demand from hyperscalers and data centre operators.

The Valuation Conundrum

Yet beneath the euphoria lies a serious question: have investors extrapolated too far from too little evidence? The Nasdaq 100 index in the United States trades at approximately 25 times forward earnings estimates, whereas comparable Asian technology hardware companies trade at roughly 16 times forward estimates.

This valuation differential has traditionally made Asia attractive, suggesting room for continued multiple expansion. Yet some observers worry that the concentration of Asian equity markets on a handful of mega-cap semiconductor stocks creates fragility.​

Sanford C. Bernstein analysts cautioned that quality deserves priority amid bubble concerns, even whilst acknowledging that 2026 remains 'all about AI'. This tension—between the obvious structural tailwinds supporting semiconductor demand and the increasingly bubbly sentiment pervading markets—will likely define sentiment throughout the year.​

TSMC is scheduled to report earnings on January 15, providing a crucial test of whether the market's exuberant projections hold water. Meanwhile, around 11 artificial intelligence-related companies have laid out plans to list in Hong Kong this month, with potential proceeds of up to $4.1 billion, suggesting that Asian capital markets managers believe the AI boom has considerable runway remaining.

For now, though, TSMC's record-breaking Monday provides a powerful reminder that in markets intoxicated by artificial intelligence optimism, sellers have become almost entirely absent.