Aletheia Capital Raises TSMC Price Target to NT$3,500 — the Highest on the Street

The third upgrade of 2026: a timeline of increasing conviction

Aletheia’s trajectory this year reflects rapidly mounting confidence in TSMC’s AI-driven super-cycle:

• January 2026: Target raised from NT$2,100 to NT$2,400, citing capacity expansion and richer product mix .
• April 2026: Target lifted to NT$3,000 ($600 ADR), after the firm noted aggressive pull-ins of N3 capacity in Japan and faster-than-expected CoPoS and SoIC ramps .
• June 2026: Following in-person fab tours across Taiwan, Aletheia raised the bar again to NT$3,500 ($700 ADR) — the highest among all domestic and international analysts .

The key trigger for the latest bump was physical evidence. “The market is still underestimating,” the analysts wrote after visiting new factories, noting faster-than-expected capacity buildup that is not yet reflected in consensus models .

Q1 2026 results: the numbers backing the bull case

Aletheia’s target doesn’t rest on speculation alone. TSMC’s most recent quarterly results offered hard evidence of accelerating momentum.

• Revenue: $35.9 billion in Q1 2026, up 40.6% year over year and slightly above the company’s own guidance range of $34.6–$35.8 billion . In Taiwan dollar terms, the figure topped NT$1.13 trillion .
• Profitability: Gross margin hit 66.2%, with an operating margin of 55.6% and net profit margin of 50.5% .
• Forward guidance: For Q2 2026, TSMC guided revenue between $39 billion and $40.2 billion, signaling sequential acceleration. Aletheia expects both Q2 revenue and gross margin to surprise to the upside .
• Full-year outlook: CEO C.C. Wei reaffirmed TSMC’s annual revenue guidance of approximately NT$2.75 trillion (~$85B+), stating the company has seen no change in customer behavior despite lingering tariff uncertainties .

Aletheia’s own models are more bullish than TSMC’s official language. The firm projects 2026 revenue reaching $163.3 billion (up ~33% year on year) and sees 2027 revenue potentially exceeding $200 billion .

The 2028 thesis: why Aletheia sees a profit breakout

Most TSMC price targets look out one or two years. Aletheia is looking further — and what it sees is a structural shift in the chip market’s revenue base.

The analysts estimate that TSMC’s EPS can double from 2026 to 2028 . Unlike short-term demand cycles, this growth trajectory is rooted in three dynamics:

1. Broader AI compute demand: Beyond NVIDIA’s GPUs, Aletheia points to accelerating demand for CPUs, custom ASICs, and Google-style TPUs. In their view, 2028 will be the year this diversification shows up in profit margins, not just revenue .
2. Capacity that is being pulled forward: TSMC is aggressively accelerating N3 (3nm) production in Japan, pulling in advanced CoPoS (chip-on-panel-on-substrate) packaging, and expanding SoIC integration capacity faster than most models assume .
3. Sustained 30%+ CAGR: If current demand and execution continue, Aletheia estimates TSMC can maintain a compound annual growth rate “well above 30%” . The 2027 EPS growth rate is pegged at approximately 33–35%, with further acceleration into 2028 .

The valuation methodology applies a 20x multiple for local shares (on 2027–2028 average earnings) and 25x for US-listed ADRs . This forward-looking framework — not a near-term P/E — is what produces the NT$3,500/$700 target.

AI demand: the structural engine beneath the numbers

AI demand is both TSMC’s present strength and its 2028 growth anchor. The Q1 2026 earnings breakdown underscores its dominance:

• AI and high-performance computing (HPC) are the single largest revenue contributors, with advanced nodes (3nm and 5nm) running at high utilization rates .
• Hyperscale cloud providers are accelerating custom ASIC development, while AMD is capturing incremental market share and NVIDIA’s AI GPU demand continues to surge .
• TSMC’s advanced packaging technologies — CoWoS (Chip-on-Wafer-on-Substrate) and SoIC — are operating near capacity, pushing the company to add lines in Taiwan, Japan, and Arizona simultaneously .

Aletheia’s thesis explicitly assumes this AI demand holds structurally strong through 2028. It’s worth noting the price target is not tied to a specific deadline; the report does not commit to a timeline for when shares reach NT$3,500, only that the earnings power to justify it is being built now .

The risk, as always, is the assumption itself. If AI capital expenditure slows, or if US-China trade restrictions tighten further, the 20–25x P/E multiple becomes harder to defend. But for now, the physical evidence Aletheia’s analysts saw on the ground in Taiwan has them convinced the market is still playing catch-up.