Here’s Why Bernstein’s Mark Li Is Raising His Price Target on TSMC (TSM) to $600 Farooq Thu, November 12, 2026 at 5:34 PM EST 4 min read TSM -1.33% ^GSPC -0.35% ^IXIC -0.39% TSM -1.33% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
We just published a list of the 10 Unrivaled Stocks to Buy for the Next Decade and Taiwan Semiconductor Manufacturing (NYSE:TSM) ranked 6th on this list.
Wall Street had its worst day since April 2025 last Thursday. The Nasdaq Composite fell 5.5%, the S&P 500 dropped 4.4%, and the Philadelphia Semiconductor Index plunged 12.2%.
Two worries drove the selling. Investors doubt that heavy spending on artificial intelligence will pay off, and candidates who ran against data center expansion won races in Texas and Georgia in the midterm elections. Mark Hackett, chief market strategist at Nationwide, told Reuters that chip stocks are a volatile, cyclical group in which "when sentiment shifts, the reactions are intense." Hedge funds, he added, had been selling for weeks.
A rout like that tests which businesses can protect their profits when investors lose their nerve. An economic moat is a company's lasting edge over its rivals, the kind that guards its market share and earnings.
Moats come in several forms. A company can be the low-cost producer, own a brand that lets it charge more, or hold patents and licenses that keep copycats out. Scale helps, because large producers spread their costs over more units. High switching costs make customers think twice before moving to a rival. What matters most is how long the advantage lasts and how much it depends on the people running the company.
You might also be interested in our ranking of the 10 Best Semiconductor Stocks to Buy for the Next Decade, the group that took the heaviest hit.
Stocks have bounced since. The S&P 500 and the Nasdaq each climbed more than 1% on Wednesday, and the semiconductor index jumped 7%. Equities have whipsawed all week, though, as worries about slower data center deployment and higher interest rates compete with the urge to buy the dip, Reuters reported.
Brokerages including Morgan Stanley and UBS have called the rout overdone. Morgan Stanley said the likely effect is a push-out of some data center projects from 2028 to 2029, not a derailing of the spending boom. Goldman Sachs estimates that about 45% of planned US data center capacity faces possible restrictions. Our list of the 10 Fastest-Growing AI Stocks to Buy Now covers more of the names caught up in that debate.
Strategists at Yardeni Research wrote in a Friday note that the backlash against data centers and other constraints are "speed bumps, not roadblocks." They argue that Wall Street is pricing in the roadblocks. Bank of America Global Research analysts said investors bought into last week's selloff, with institutional clients leading the purchases.
TSMC made it to our list because it has an average upside potential of 33% and a market cap of $2.15 trillion.
Bernstein analyst Mark Li raised his price target on Taiwan Semiconductor Manufacturing to $600 on November 4 and kept an Outperform rating. He points to growing demand for custom CPUs that Amazon and Google design for their own use, and to the 2-nanometer process as a central growth driver. Agent-style AI workloads are speeding up CPU demand, he argues, even as PC and low-end smartphone demand has come in softer.
TSMC builds chips for other companies, and its moat is manufacturing know-how that no competitor has matched at scale. Chips at 7-nanometer and smaller sizes made up 79% of wafer revenue last quarter. Revenue grew 41.2% and landed above the top of the company's guidance, and management is spending $60 billion to $64 billion this year to keep the lead.
The risks are structural. Nearly all of the most advanced production sits in Taiwan, and a handful of large customers account for much of the demand. Our look at whether the valuation can absorb that is in TSMC's Profit Soars 69%, but Can its Next Chip Breakthrough Justify the Valuation?
While we acknowledge the risk and potential of TSM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: Does Micron (MU) Have an Economic Moat at All? and Jim Cramer and Ken Fisher's AI Pick: Microsoft (MSFT)
Disclosure: None. Follow Insider Monkey on Google News.
