JPMorgan: AI demand is "bursting" advanced process technology TSMC's Q1 gross margin may exceed expectations and rise further

Ask AI · Does JPMorgan’s raised target price signal sustained explosive demand for AI chips?

【JPMorgan: AI demand “squeezes” advanced process technology; TSMC Q1 gross margin may rise above expectations】 Caixin News, April 3 — JPMorgan recently issued a research report on TSMC (TSM.US), looking ahead to the company’s Q1 results for 2026. It expects Q1 gross margin to trend strongly upward, driven by AI demand moving higher, which will further push up capital expenditures, and it has raised the target price to NT$2,400. Entering the Q1 2026 earnings reporting season, the bank believes TSMC’s gross margin in Q1 and Q2 of 2026 will significantly exceed expectations, mainly thanks to persistent tightness in 3nm capacity, high capacity utilization, increased demand for expedited wafers, and depreciation of the New Taiwan dollar. The bank expects the company’s revenue in Q2 2026 to increase 6%–8% quarter over quarter, with the upper end of growth mainly constrained by 3nm capacity. Although any upward revision to the full-year 2026 revenue guidance may have to wait until the Q2 earnings call, the bank expects management’s qualitative statements on trends in AI and iPhone demand will be very positive—enough to offset the softness in client PC and Android phone demand. The bank has raised its earnings forecasts for 2026/2027 by 4%/6% to reflect stronger growth and better gross margins, and has increased its target price for end-2026 to NT$2,400, corresponding to a 20x 12-month forward P/E ratio.