3Q26F review: AI cycle is not over; maintain Buy

3Q26F preview: AI cycle is not over; maintain Buy. We believe 2026F is largely over for TSMC with revenue growth (USD) likely tracking above 40% y-y, and overall AI chip demand remains robust and has not yet reached its cyclical peak given hyperscalers' spending upside into 2027F and new data center builds. The October earnings call is likely a non-event, but we raise 2027/28F EPS by 5%/8% mainly on N3 capacity upside (aided by a productivity enhancement package boosting EUV throughput) and mature node price hikes. Our new TP of TWD3,615 (from TWD3,425) is based on 25x (unchanged) 2027F EPS, near the high end of TSMC's historical 10-30x band. We reiterate Buy as TSMC should trade at a premium to SOX given its AI-enabler position and robust growth outlook. We also note a widening GM gap between the "nearly monopolistic" AI logic foundry and "oligopolistic" commodity memory makers, suggesting a steady uptrend for TSMC's GM going forward.