TSMC Stock Price Forecast - TSM Near $343 As AI Demand, 3nm Ramp And $52B CapEx Drive 30% Growth

NYSE:TSM – AI Capacity Choke Point At $343, Not A Demand Problem

NYSE:TSM trades around $343.21 with a day range of $342.03–$349.85 and a 52-week range of $134.25–$351.33, giving the company a market cap near $1.40T, a trailing P/E of 32.71 and a dividend yield of roughly 0.98%. At this price level the story is clear: the AI upcycle is hitting the limit of what TSMC can physically supply, not the limit of what customers want to buy, and the current valuation still reflects a discount to that reality.

Earnings And Margins: NYSE:TSM Prints AI-Level Growth At Foundry Margins

In Q4 2025, NYSE:TSM reported revenue of roughly $33.7B, up about 20–26% year over year depending on FX and about 1.9–2% sequentially, even though wafer volumes declined around 3% QoQ. Gross margin reached 62.3%, above guidance and higher both sequentially and YoY, while operating margin was roughly 54% and net margin around 48%. That means a revenue growth rate in the low-20s translated into operating profit growth north of 30% because mix, pricing and utilization did the work. Management guided Q1 2026 revenue to $34.6–$35.8B, implying about 4% QoQ and ~36–38% YoY growth, with gross margin in a 63–65% band and operating margin 54–56%, signalling that the profitability profile is not being sacrificed to chase AI volume.

Revenue Mix: NYSE:TSM Now An AI And HPC Core Utility

The internal mix confirms that NYSE:TSM is now an AI infrastructure utility rather than a generic foundry. High-performance compute, which includes AI accelerators and data-center logic, grew roughly 48% year over year and now represents 55–58% of total revenue. Smartphones still account for about 32% of sales with ~11% YoY growth. Internet of Things delivered around 15% growth, automotive roughly 34%, while digital consumer electronics was flat to down, with a sequential drop near 22% as that segment remains the weak spot in global demand. The important point: growth is coming from the most strategic segments – AI, HPC and higher-end smartphones – where pricing power and node leadership are strongest.

Node Structure: 3nm And 5nm Turn NYSE:TSM Into The AI Toll Booth

Node contribution shows exactly where margin and moat sit for NYSE:TSM. In Q4 2025, 3nm technology contributed about 28% of wafer revenue, up from the mid-teens a year earlier. 5nm added roughly 35%, and 7nm about 14%, so around 77% of total wafer revenue came from 7nm and more advanced nodes, versus roughly 69% a year before. Management expects 3nm to be margin-accretive in 2026, so as more 5nm capacity converts to 3nm and 2nm ramps, the blended gross margin can stay above 60% even as capex explodes. The fact that revenue increased despite lower volumes underlines the pricing power that comes from being the only realistic supplier at these nodes.

AI Demand: For NYSE:TSM The Constraint Is Packaging, Not Orders

For NYSE:TSM, the AI cycle is not a question of “is demand real” but “how fast can packaging and capacity be built.” Management is explicit that growth is supply-limited, not demand-limited, with advanced packaging – CoWoS and similar – the current bottleneck. Industry data points to CoWoS-type capacity at TSMC reaching around 125,000 wafers per month by the end of 2026, implying more than 70% annual growth in advanced packaging throughput. At the same time, the order book for AI accelerators and HPC logic continues to rise, and commentary from both TSM and its end customers confirms that AI workloads are already embedded in enterprise and hyperscale plans for the next several years, not treated as a passing theme. When the foundry has to invest tens of billions just to narrow the gap between what clients need and what it can ship, there is no demand problem in sight.

CapEx Wave: NYSE:TSM Commits $52–56B In 2026 To Lock In 2028–2029 Growth

The CapEx profile is the clearest quantitative expression of the thesis. NYSE:TSM spent about $29.8B in 2024, lifted that to around $40.9B in 2025, and now plans $52–56B in 2026. Roughly 70–80% of that will go into advanced process technologies such as 3nm and 2nm, while 10–20% targets advanced packaging. Most of the capacity funded by the 2026 CapEx will generate volume primarily in 2028–2029, which is why management is comfortable guiding to approximately 30% revenue growth in 2026 and a ~25% revenue CAGR from 2024 to 2029. There will be margin pressure during the 2nm ramp, estimated at 200–300 basis points, and overseas fabs will never match Taiwan margin structures, but the combination of higher-mix nodes, AI volume and utilization keeps gross margin projected above 56% on a multi-year view.

Overseas Fabs, Tariffs And Geopolitics: Why NYSE:TSM Is Building A Giga-Cluster In Arizona

Geopolitical and tariff risk are forcing NYSE:TSM to re-draw its footprint. The company has purchased a second land parcel in Arizona to build a multi-fab “giga-cluster” aimed at improving productivity, lowering long-term costs in the US and aligning more tightly with American industrial policy. The strategy is simple: a local-for-local manufacturing approach that reduces tariff and export-control friction and makes more governments direct stakeholders in TSMC’s stability. The trade-off is permanent margin dilution relative to Taiwan operations, because labor, construction and operating costs in the US and other overseas locations are structurally higher. However, the benefit is resilience: a broader physical footprint across regions, slightly lower geopolitical concentration risk, and deeper integration into Western supply chains that depend on assured access to leading-edge capacity.

Balance Sheet, Cash Flow And Capital Returns: NYSE:TSM Can Fund The Plan Internally

Despite the CapEx shock, NYSE:TSM remains in a net cash position and internal projections see net cash potentially reaching around $120B+ by 2027 if current trajectories hold. EBITDA has been revised upward by roughly 7–8% for 2025–2027, with EBITDA CAGR moving from about 19.8% to approximately 24.6%. Operating cash flow is expected to grow sharply even as free cash flow in 2026 looks flatter because CapEx as a share of cash flow climbs. Capital returns remain conservative; the recent ~20% dividend increase still leaves yield at only 0.98% on a $343 share price, underscoring that this is a growth and compounding story rather than an income vehicle. For a granular view of ownership dynamics and executive behavior, investors can track activity via the TSM stock profile and detailed insider transactions, using insider flow more as a sentiment and governance signal than as a direct liquidity driver given the company’s scale.

Valuation: How NYSE:TSM Compares To AI Customers Like NVDA, AMD And AVGO

At $343, NYSE:TSM trades at a trailing P/E of about 32.7x and roughly 26x 2026 EPS on current estimates, with revenue expected to grow around 30% in 2026 and AI accelerator revenue projected to compound in the mid-to-high 50% range through 2029. By comparison, headline AI names like NVIDIA, AMD and Broadcom trade at forward P/E multiples in the 25–34x region on 2026 numbers, despite being structurally dependent on TSMC’s leading-edge capacity. Several detailed valuation frameworks have pushed fair value for NYSE:TSM into the $460+ zone, implying about 35% upside from the current level, even before considering potential multiple expansion. In other words, the market is pricing TSMC at a discount to many of its own customers despite the fact that any meaningful slowdown in TSM growth would almost certainly coincide with a similar slowdown in those downstream names.

**Risk Map: Execution, Concentration And Macro For NYSE:TSM

The main risks around NYSE:TSM are concentrated but clear. Taiwan–China tension will never fully disappear, and although overseas fabs reduce the impact of a single-point shock, they do not eliminate it. Tariff or export-control shifts can complicate tool imports and customer shipments, especially as the company deepens its US and global presence. Customer concentration remains high: a significant share of incremental growth comes from a narrow group of AI chip vendors and hyperscalers; if those players pause data-center capex or shift architecture, the impact will run straight through TSM’s top line. On the execution side, 2nm and Arizona fabs must ramp on time and on budget; missteps here would pressure margins and push out returns on the $52–56B CapEx plan. Finally, rising memory and component prices can hit consumer electronics volumes at the low and mid tiers, though TSM’s exposure is skewed to high-end devices that are less sensitive to these costs.

Verdict: NYSE:TSM Is A Buy At $343 With AI Capacity As The Core Catalyst

After running through spot pricing, earnings quality, mix, node structure, AI demand, CapEx, geopolitics, cash flow and comparative valuation, the picture for NYSE:TSM is straightforward. The stock trades around $343 with a realistic fair-value band in the mid-$400s, supported by ~30% expected revenue growth in 2026, a ~25% revenue CAGR out to 2029, and gross margins consistently above 60% even through a heavy investment cycle. The limiting factor is capacity, not demand, and the company is deploying $52–56B of CapEx in 2026 alone to close that gap while maintaining a net-cash balance sheet. Against AI peers that carry similar or higher multiples despite depending on TSMC’s wafers, the risk-reward remains skewed in favor of owning the choke point rather than only the chips that ride on top of it. On the data, NYSE:TSM is a Buy with a clearly bullish bias, with upside driven by capacity coming online over the next 24–36 months rather than by speculative upgrades to the demand narrative.

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