The Stifel equity research team is piling on to what has already been a productive year for Taiwan Semiconductor (TSM), starting the chip company at Buy as they begin coverage on the broader foundry industry.
On Sept. 2, Stifel analyst Sahej Singh announced the start of his coverage on the semiconductor foundry subsector, calling it the “industrial bottleneck of the AI hardware value chain.” He believes companies including Taiwan Semiconductor, as well as more specialized GlobalFoundries (GFS) and Tower Semiconductor (TSEM), are ideally positioned to capture the secular growth in the space.
In the report, which is the latest in a string of bullish calls on Taiwan Semiconductor, Singh starts TSM stock at Buy, calling it a “‘must-own’ top-quality long-horizon buy that benefits from multiyear compound growth.”
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The Bull Case for TSM Stock
Singh’s case for the foundry industry is that computer generations are dependent on a supply base that takes a great deal of time and money to expand, and that’s concentrated in just a few manufacturers. During the current cycle, volume growth, better unit economics, and utilization should result in better-than-usual operating leverage. And as demand expands, manufacturers benefit from the incremental economics.
As for Taiwan Semiconductor itself: “TSM is the name in our foundry coverage the AI buildout cannot ship without, and we think the more useful way to own it is as a long-term industrial-cyclical compounder rather than a momentum vehicle,” he says.
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Singh warns that although Taiwan Semiconductor management raised its expectations for the through-cycle gross margin floor, to 56% from 53% previously, there are near-term margin questions connected to the overseas fabrication builds and the 2-nanometer ramp-up.
He adds that while TSM trades below its AI-levered fabless peers, its enterprise value-to-sales “sets the leadership premium” among foundry names. And he also points out that TSM is a crowded trade right now. Indeed, the company currently boasts 19 Buy calls against just one Sell.
| Taiwan Semiconductor (TSM): Quick Stats | |
|---|---|
| Market cap | $2.1 trillion |
| Dividend yield | 1.1% |
| Forward price-to-earnings (P/E) | 24.6 |
| Price/earnings-to-growth (PEG) | 0.99 |
| Source: Yahoo! Finance. Data is as of Sept. 2, 2026. | |
“That combination of high conviction and crowded positioning is why we frame TSM as a ‘must-own’ multi-year position rather than a chase; we would add into industrial-cyclical drawdowns and look to trough-on-trough earnings accretion overtime,” Singh says.
Stifel’s $515 price target on TSM stock, which implies 25% upside from Tuesday’s close, is also more conservative than the Street consensus. The pros on average have Taiwan Semiconductor shares trading at $552.38 in a year from now, which would be closer to a 33% gain.
Argus Research is among other analyst outfits that have weighed in on TSM recently. In mid-July, Argus Research analyst Jim Kelleher (Buy) raised his target price to $500 (21% upside) from $450 previously, following the company’s Street-beating second-quarter earnings report.
“TSM is successfully expanding production of 3 nm and 5 nm products and is beginning to ramp 2 nm products,” he says. “Beyond current macroeconomic and other headwinds, we believe that the company, which is the world’s leading merchant fab, is positioned for sustainable annual sales growth at a double-digit pace.”
Related: Pros Boost Nvidia (NVDA) Price Targets After Blockbuster Q2
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