UBS raised its price target for Taiwan Semiconductor Manufacturing Company (TSMC) on Monday.
The new target is NT$3,400, up from NT$3,000.
The investment bank maintained its Buy rating for the chipmaker.
Analysts cited massive and sustained demand for advanced artificial intelligence chips as the primary valuation driver.
UBS increased its 2026 sales forecast for the company.
The bank anticipates TSMC will boost capital expenditures between 2026 and 2028.
This expansion aims to ease customer concerns regarding supply constraints during the AI boom.
UBS suggests the capacity growth could lead to product price hikes in early 2027.