TSM Stock Forecast & Price Target

Taiwan Semiconductor Manufacturing Co. (TSMC) is projected to achieve a sequential revenue growth of approximately 4% in Q1 2026, driven by effective capacity planning and increased wafer shipments for high-performance computing (HPC) customers. The company has revised its earnings per American Depositary Share (ADS) forecast for calendar year 2026 upwards from $12.13 to $12.61, signaling robust financial performance. Additionally, TSMC anticipates a compound annual growth rate (CAGR) of approximately 25% for overall revenue and a significant increase in AI revenue CAGR to the mid- to high-50% range from 2024 to 2029, indicating strong growth prospects fueled by rising demand in AI technology.

Taiwan Semiconductor Manufacturing Co. (TSMC) has provided guidance for Q4 indicating a slight expected revenue decline of 1% quarter-over-quarter, which raises concerns about future growth despite a strong performance in Q3. The company's capital intensity remains flat year-over-year at around 33%, suggesting that ongoing high capital expenditures may not correspond with revenue growth in the coming years. Furthermore, TSMC's reliance on managing capital expenditure and capacity utilization effectively is critical, as a 1% decline in utilization could lead to a significant 40 basis point decrease in gross margins, further impacting earnings.