TSM Stock Price Forecast - TSM Near $340 Aims For $461–$475 As AI Demand And 62% Margins Redraw Valuation

NYSE:TSM – AI Super-Cycle Name Now Priced As Global Compute Infrastructure

NYSE:TSM – Where The Stock Trades After Q4 2025 Blowout

NYSE:TSM is trading roughly in the $340–$350 range after a sharp rerating driven by AI demand. At these levels, the stock changes hands at about 24× expected 2026 EPS of roughly $14.3, with the company itself now targeting around 30% revenue growth in 2026 and a lifted 2024–2029 revenue CAGR of 25% (up from 20% before the latest guidance upgrade). That is not a story stock multiple; it is a growth multiple on numbers that have just been revised sharply higher. The market has already rewarded the Q4 2025 beat – revenues reached about $33.7 billion in the quarter, up 25.5% year on year in USD – but the move is not disconnected from fundamentals. The critical point is that the 30% growth guided for 2026 is explicitly described as supply-constrained, not demand-constrained: capacity, not orders, is the brake. That is exactly the backdrop in which a foundry name can sustain a premium to the broader tech sector even after a strong run.

NYSE:TSM – From Cyclical Foundry To Monetising Datacenter Energy Efficiency

The strategic shift at NYSE:TSM is away from “we sell wafers at cost-plus” and toward “we monetise energy savings and performance for hyperscalers.” The next nodes – N2 and A16 (around 1.6 nm) – are being designed together with backside power delivery and advanced packaging so that a single AI accelerator can process 15–20% more tokens per watt over its lifetime. Hyperscalers such as Microsoft, Meta, Alphabet and Amazon are now constrained as much by megawatts and cooling as by chip budgets. If one wafer generation cuts datacenter power OpEx by billions over the life of the hardware, NYSE:TSM can justify materially higher average selling prices and shift from cost-plus pricing to value-capture pricing. Instead of competing purely on die cost, the foundry is starting to price against the marginal cost of a kilowatt-hour in a large-scale AI cluster. That is why management felt comfortable lifting the long-term growth target to 25% per year through 2029 and still talking about strategic, not opportunistic, pricing. Wafer ASPs already climbed about 20% year on year in 2025 – the second consecutive year of that order of magnitude – and the N2/A16 roadmap plus advanced CoWoS packaging gives NYSE:TSM the technical leverage to keep capturing more of the downstream energy savings upfront.

NYSE:TSM – N3 / N5 / N7 Mix And Platform Growth Prove The AI Super-Cycle Is Real

The node and platform mix confirms that this is not just an AI story on slides. In Q4 2025, about 20% of revenue came from 3 nm, 52% from 5 nm and the rest of the sub-7 nm bucket from 7 nm, meaning that 3 nm, 5 nm and 7 nm together contributed roughly 77% of total revenue. 3 nm has ramped from zero to nearly one-third of advanced-node revenue in a little over a year and is expected to move above the corporate average margin some time in 2026 as yields and utilisation keep rising. On the platform side, high-performance compute (HPC) – the core AI/accelerator bucket – grew about 48% year on year and now represents 58% of total sales. Smartphones still account for about 32% of revenue and grew 11% year on year, while automotive climbed 34%, IoT 15% and digital consumer electronics was flat. The message is straightforward: the growth engine is AI compute, but the legacy platforms are not collapsing; they are providing a base that gives operating leverage as HPC and advanced nodes expand. Sequentially, HPC was up about 4% and smartphones 11%, while volumes overall actually declined around 3% quarter on quarter. Despite that slight volume drop, revenue increased, which tells you the uplift is coming from mix and pricing, not just units moved.

NYSE:TSM – Margin Expansion, Strategic Pricing And The 56%+ Gross Margin Line

The margin trajectory is the other hard proof that NYSE:TSM is extracting more economic value per wafer. Q4 2025 gross margin reached roughly 62.3%, up 280 bps sequentially and beating the previous guidance range by around 130 bps at the high end. Cost of revenue in absolute terms actually fell about 1.8% quarter on quarter while sales rose 5.7% in local currency and 1.9% in USD, which means fixed costs were spread over higher-value output. At the same time, the company has set a long-term gross margin floor of 56% and above, up from the prior 53%+ target. That new target is being issued despite known headwinds: node transitions and overseas fabs are expected to dilute gross margin by 2–3 percentage points in early stages and 3–4 points as foreign plants scale. For Q1 2026, guidance is for 63–65% gross margin and 54–56% operating margin on $34.6–$35.8 billion of revenue, implying another sequential margin step-up even as capacity remains tight. The CFO has been explicit that new nodes will be priced higher, blended ASPs will keep rising and pricing will remain “strategic, not opportunistic” – which in practice means using the energy-efficiency and performance delta of N2/A16 to hold the 56%+ margin line even while capex and depreciation spike.

NYSE:TSM – CapEx $52–$56 Billion: Removing Bottlenecks Or Creating Profitless Scale

For 2026, NYSE:TSM plans to lift capex from roughly $40.9 billion to a massive $52–$56 billion. Around 10–20% of that will be allocated specifically to advanced packaging, where today’s bottleneck is most acute: demand for AI accelerators is higher than what can be packaged and delivered. The rest goes into expanding and converting capacity, including shifting 5 nm lines into 3 nm as N3 demand grows, ramping N2, and building out overseas fabs in the U.S. and other regions. The upside is clear: with AI accelerator revenue expected to grow at a mid- to high-50s percent CAGR from 2024 to 2029, every incremental unit of high-end capacity is sellable at premium ASPs. Management now assumes a 25% revenue CAGR over that same period. The risk is also clear: if N2 yields, cycle times or equipment choices (for example extended use of multi-patterning EUV instead of timely high-NA EUV adoption) push the marginal cost per good die above what customers are willing to pay for the energy savings, then the economics of the node “curve” invert. In that scenario, gross margins could sink below the 56% long-term target while capex stays north of $50 billion. You then get revenue growth but falling free cash flow and return on capital – the “profitless prosperity” risk flagged in the more cautious views. The key control variable here is whether gross margin stays comfortably above 56% once N2 and more overseas capacity are fully embedded.

NYSE:TSM – Free Cash Flow, Balance Sheet And The Option Not Being Used

Even with the heavy investment cycle, NYSE:TSM is projecting robust free cash generation over the medium term. Operating cash flow is ramping alongside the AI wave, and although 2026 free cash flow is expected to be flatter due to the $52–$56 billion capex bill, the company is still on a trajectory where net cash could exceed $120 billion by around 2027 if current trends hold. That is an unusually strong balance sheet for a capital-intensive story with 25% growth guidance. One clear inefficiency: the company is not executing material share repurchases despite this balance sheet. That leaves more upside on the table for long-term investors – buybacks at 24× forward earnings while EPS estimates are being revised up double digits would be accretive – but it also means you are dependent on organic compounding plus dividends and multiple re-rating, rather than financial engineering.

NYSE:TSM – Valuation: 24× Forward EPS, PEG Below 1 And Price Targets From 398 To 685

On current estimates, NYSE:TSM trades at roughly 24× forward earnings for 2026, using a consensus EPS around $14.3. Management is aiming for about 30% revenue growth in 2026 and a 25% revenue CAGR through 2029, with long-term EPS growth of roughly 30% assumed in one of the more aggressive valuation frameworks. Using a non-GAAP PEG ratio, the sector trades around 1.66× while NYSE:TSM sits near 0.8×, despite an earnings growth rate roughly 80% higher than the sector median. On that methodology, the stock looks more than 50% undervalued relative to its peers; applying that 50% discount to current prices implies a fair value in the region of $680–$700 per share (one framework explicitly arrives at a ~$685 target, over 100% upside from the low-$340s). A more conservative model based on EBITDA revisions and sector multiples produces a 12-month target near $461, about 35% above the current price. Both approaches incorporate the latest upward revisions in EBITDA (roughly +9.7% for this year, +6% for 2027) and acknowledge that free cash flow estimates for 2026–2027 were trimmed around 2.8% because of higher capex. Even if you ignore the $685 “full rerate” outcome and focus on the $461 target, the risk/reward still skews clearly upward given the growth and margin profile.

NYSE:TSM – Technical Structure: 300 As Floor, 342–398–475 As Upside Ladder

The chart reinforces the fundamental story but also shows where risk sits. On weekly candles, NYSE:TSM has already cleared the prior major resistance zone around $300 – the 100% Fibonacci retracement from the last major down-cycle – and has been using that region as a new support floor. Price is now oscillating around the 127.2% extension near $342, with a clean weekly close above that level opening room toward the 161.8% extension around $398. If the current trend extends, the 211.8% extension near $475 is reachable by late 2026 in the more bullish technical scenario. Momentum indicators confirm trend strength: the MACD line sits well above the signal line with a wide gap, the histogram is positive and expanding, and the RSI around the high 70s is holding in overbought territory without clear negative divergence – a common pattern in sustained hyper-growth moves. Stochastics in the high-80s also show an overbought “lock” rather than a topping pattern. Importantly, these moves are happening on rising volume; the price-volume trend has broken to new highs, signalling real capital inflow rather than a short squeeze. The downside control level is the 13-week EMA, currently near $300. A decisive break below the 13-week EMA and the rising trendline from the April 2025 lows would indicate that the current leg is exhausted and a deeper correction or re-rating is underway.

NYSE:TSM – Smartphone Exposure, Memory Costs And Demand Risk Recalibrated

One of the earlier concerns was that rising DRAM/NAND prices – visible in the outperformance of memory names – would feed through into smartphone bill-of-materials costs, ultimately pressuring handset demand and therefore foundry volumes. With smartphones representing around 30–32% of NYSE:TSM revenue, that risk could have mattered. The latest guidance, however, has largely neutralised this fear. Management raised the long-term revenue CAGR target from 20% to 25% while smartphone revenue climbed to 32% of the mix and still grew double-digit year on year. That tells you they do not see smartphone cyclicality as a constraint on the new growth path. AI accelerator revenue growth has, in parallel, been upgraded from the mid-40s percent annually to the mid- to high-50s percent range for 2024–2029. When AI accelerators grow at that pace and HPC already contributes 58% of revenue, the smartphone exposure becomes a manageable cyclical layer on top of a structural AI compute story, not a core risk that can derail the thesis unless macro conditions for consumer devices deteriorate far more than currently anticipated.

NYSE:TSM – Overseas Fabs, Tariffs And The Real Geopolitical Math

The long-term geopolitical risk everyone fixates on is obvious: Taiwan-China tension. What matters more for the next few years is how NYSE:TSM executes its overseas fab strategy and how that interacts with trade policy. Taiwan has agreed to a package where at least $250 billion will be invested in the U.S. in semiconductors, energy and AI-related projects. In return, U.S. tariffs on key imports are capped below 15%, and Taiwanese chipmakers get preferential treatment: during construction, they can import up to 2.5× the planned U.S. capacity with no Section 232 duties, and even after a U.S. fab is completed they can still bring in 1.5× the new U.S. capacity duty-free. That structure directly supports NYSE:TSM’s local-for-local strategy and partially offsets the margin dilution of building outside Taiwan. The company has not yet pushed its total U.S. commitment above the already-public $165 billion figure, but it has purchased additional land near its Arizona site and pulled forward the second fab to high-volume production in the second half of 2027. The margin hit from these overseas fabs is baked into the 2–4 percentage-point gross-margin headwind described earlier; in exchange, the firm secures a broader political coalition – U.S., Europe, and other regions now have direct economic interest in maintaining supply from NYSE:TSM, which matters in a world of tariff threats and tech sanctions.

NYSE:TSM – Correlation With U.S. Tech And The Timing Risk

Another explicit risk is correlation, not fundamentals. Over the last 12 months, NYSE:TSM has traded with a 24-month beta of roughly 1.1–1.2 versus U.S. tech indices. The link between the stock and U.S. mega-cap tech has been tight, except for the last couple of months where TSM has outperformed as AI enthusiasm spiked. If the S&P 500 or the broader tech complex breaks key levels and enters a genuine correction, NYSE:TSM is unlikely to be immune in the short term, even if its order book and capex plan stay intact. One of the more cautious takes explicitly flags the risk of a near-term drawdown if the main U.S. benchmark slices below a long-term support zone (in that view, around 685 on the index’s own scale) – not because anything has changed at TSM, but because a de-risking phase in U.S. equities will hit correlated names, especially those recently re-rated. That is exactly why one analysis moves from “Strong Buy” to “Buy” without any deterioration in the company’s own numbers: it is a timing call on market risk, not a downgrade of the AI compute thesis.

NYSE:TSM – How To Use TradingNews Data, Stock Profile And Insider Flows

Anyone tracking NYSE:TSM seriously should be watching three concrete data streams: the real-time chart and volume profile, the revisions in earnings estimates, and the ownership/insider picture. The live price and technical levels are available via the TradingNews real-time chart for NYSE:TSM, which you should use to track how price behaves around the $300, $342, $398 and $475 zones discussed above. For ownership, the TSM stock profile and insider transactions page are the right places to monitor whether management and key holders are adding or trimming exposure after this rerating. The current analytical frameworks you pasted do not report significant insider buying or selling around the latest print, which means the signal is neutral for now. If you start seeing consistent insider accumulation at prices near or above current levels, that would reinforce the long-term bullish stance; if insiders systematically sell into strength while guidance remains aggressive, that would not break the thesis but would push you to reduce position size or demand a wider margin of safety.

NYSE:TSM – Investment Stance: Buy, With Aggressive Adds On Pullbacks

Putting all of this together – 25% revenue CAGR guidance through 2029, AI accelerator revenue expected to compound in the mid- to high-50s percent range, Q4 gross margin already at 62.3% with Q1 guided to 63–65%, a long-term gross margin floor of 56%+, a capex plan of $52–$56 billion aimed at removing packaging and capacity bottlenecks, and a forward multiple near 24× on sharply upgraded EPS – the case for NYSE:TSM as a Buy remains strong. The technical setup points to a support floor around $300 and upside ladders toward $398, $461 and potentially $475 in the next leg, with a more aggressive valuation framework arguing for longer-term potential toward roughly $685 if the market fully prices in the growth and margin profile. The main risks you must price in are: (1) node-economics inversion at N2 if costs outrun pricing power and margins slip below 56% while capex stays above $50 billion; (2) overseas fab margin dilution exceeding the guided 3–4 percentage points; and (3) a broad U.S. tech correction dragging the stock lower purely on correlation. Given the current data, the rational stance is straightforward: treat NYSE:TSM as a core AI infrastructure holding, rated Buy, and look to build or increase positions on pullbacks toward the rising 13-week EMA and the $300 area rather than chasing every spike, while tracking margins against the 56% line and revisions against the 25% CAGR promise.

That's TradingNEWS