TSM Stock Forecast & Price Target

Taiwan Semiconductor Manufacturing Co. (TSMC) is expected to benefit from robust increasing demand for artificial intelligence, contributing to a revised revenue growth outlook for FY25, now projected at approximately 30%, up from a previous estimate of 24-26%. The company's successful foundry business model, characterized by economies of scale, positions TSMC favorably against competitors, particularly in a high fixed-cost industry. Additionally, TSMC's strong operational performance, reflected in its solid operating margins and an illustrious customer base that includes tech giants like Apple, AMD, and Nvidia, further enhances its positive financial outlook.

Taiwan Semiconductor Manufacturing Co. has issued guidance indicating a high-single-digit percentage decline in quarterly revenue for Q4 2025, marking the first forecasted decline in what is typically a seasonally strong quarter since coverage began in 2021. Additionally, TSMC anticipates a sequential decrease of approximately 200 basis points in gross margins for Q3 2025 due to foreign exchange impacts and the ramp-up of overseas production facilities, which are expected to be margin dilutive. These indicators suggest potential challenges ahead in maintaining profitability amidst changing market dynamics and increased competitive pressures.