Investing.com -- Analysts are growing more bullish on Taiwan Semiconductor Manufacturing (TW:2330) (NYSE: TSM) as expectations around pricing power and medium-term earnings continue to build, supported by strong AI demand and advanced-node capacity.

HSBC analyst Frank Lee raised his price target on TSMC to NT$2,300 from NT$2,050 and reiterated a Buy rating, citing both higher earnings forecasts and a richer valuation multiple.

The revised target reflects an increase in forecast fiscal 2026 (FY26) earnings per share to NT$84.92 from NT$81.45, alongside a higher target price-to-earnings (P/E) multiple of 27 times, up from 25 times.

"We believe a higher P/E multiple of 27x, is now reasonable as TSMC’s pricing power has never been as strong as now, due to strong AI demand and higher incentives for TSMC to adjust pricing to reflect higher costs," Lee said in a note.

He argues that pricing upside is becoming a key driver of earnings momentum, helping support a projected 36% earnings compound annual growth rate between 2023 and 2027. With the shares implying around 36% upside to the new target price, Lee remains comfortable maintaining a Buy stance on the stock.

Separately, Bank of America analyst Haas Liu also lifted the target price to NT$2,150 from NT$1,960, pointing to TSMC’s structural pricing leverage at leading-edge nodes and in advanced packaging.

Limited competition at the most advanced nodes and sustained AI and high-performance computing demand underpin TSMC’s ability to protect profitability, Liu notes, saying the company has “strong pricing power to pass the upgrade and expansion cost to its customers,” even as depreciation and operating expenses rise, supporting further margin expansion.

"The trend is even more pronounced as it further strengthens the advantage in advanced packaging," he added.

Liu also highlights improving earnings visibility into 2026 and beyond, pointing to “strong demand on 3nm and 2nm” and the back-end business that “should also continue the outgrowth at 50% CAGR,” which he says supports higher earnings forecasts and underpins valuation as estimates continue to move higher.