TSM Stock Forecast & Price Target

Taiwan Semiconductor Manufacturing Co. (TSMC) is expected to see a strong earnings increase, with a rise in earnings per American Depository Share (ADS) from $12.13 to $12.61 for the calendar year 2026, reflecting robust operational efficiency and an increased focus on high-demand sectors. The company anticipates a revenue growth rate adjustment from 20% to 25%, primarily attributed to the anticipated demand in AI and new N3 capacity that is projected to contribute to incremental revenue growth beginning in the second half of 2026. Additionally, TSMC's dominant market position is underscored by its ability to capture greater market share in CPUs, driven by relationships with major clients such as Apple, AMD, and Intel, further solidifying TSMC's leadership in the semiconductor foundry industry.

Taiwan Semiconductor Manufacturing Co. has guided for a slight revenue decline of 1% quarter-over-quarter in Q4 2025, which marks a notable shift as it is the first time since coverage began in 2021 that TSMC has issued a forecast for a decline in this historically strong peak quarter. Despite strong gross margins of 59.5% reported in Q3 2025, the company anticipates a sequential drop of approximately 200 basis points in gross margin for Q4 2025, attributed to foreign exchange impacts and the ramp-up of overseas fabrication facilities, both of which are expected to be margin dilutive. Furthermore, the raised FY guidance implies a high-single-digit percent decline in Q4 2025, highlighting concerns about TSMC's capital intensity remaining flat year-over-year at around 33%, amidst a backdrop of soft demand forecasts for foundry and logic spending.