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🇹🇼 Taiwan /Economy & Trade

TSMC Stock Undervalued, Analysts See Room for Growth Fueled by AI Demand

From Liberty Times · () Chinese

Translated from Chinese, summarized and contextualized by DistantNews.

At a glance

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  • Taiwan Semiconductor Manufacturing Company (TSMC) reported a 30.1% year-over-year revenue increase in May, driven by strong demand in the artificial intelligence market.
  • Analysts predict TSMC's revenue could grow from $120.64 billion in 2025 to $255 billion by 2028, with potential stock price increases of 8% to over 70%.
  • TSMC is increasing capital expenditure and expanding 3nm production capacity in Taiwan, the U.S., and Japan to meet AI industry demand.

Taiwan Semiconductor Manufacturing Company (TSMC) is experiencing significant revenue growth, with May sales soaring 30.1% year-over-year. This surge is largely attributed to robust demand from the artificial intelligence market. The company's monthly sales figures are closely watched globally for their impact on the semiconductor industry.

Rarely do company revenue figures have such a significant impact on the global semiconductor industry as the monthly sales data released by TSMC.

— BarchartDescribing the influence of TSMC's monthly sales reports on the global semiconductor industry.

TSMC's financial performance in May reached approximately NT$416.98 billion (US$12.93 billion), a 1.5% increase from April. The strong year-over-year growth aligns with management's projections for the full year 2026, where revenue is expected to exceed 30% growth in U.S. dollar terms. The company reported first-quarter revenue of $35.9 billion with a gross margin of 66.2%, and anticipates second-quarter revenue between $39 billion and $40.2 billion.

TSMC's stock is currently undervalued, with analysts pointing to 'data' that speaks for itself.

— BarchartHighlighting the external assessment of TSMC's stock valuation.

Analysts are optimistic about TSMC's stock, with projections indicating revenue could more than double from $120.64 billion in 2025 to $255 billion by 2028. Based on a 10-year average price-to-earnings ratio of 18.5, the stock could see a 30% increase within 18 months. A higher ratio of 25 could lead to gains exceeding 70%. Currently, 13 out of 17 analysts tracking the stock recommend a "strong buy," with an average target price suggesting an 8% upside from current levels.

The company currently expects full-year 2026 revenue (in U.S. dollars) to grow by more than 30%.

— TSMC managementCommunicating financial outlook during the first-quarter earnings call.

To support this anticipated growth and meet market demand, TSMC is significantly increasing its capital expenditure for 2026, nearing the higher end of its previous $52 billion to $56 billion forecast. The company is expanding its 3nm production capacity across facilities in Taiwan, Arizona (U.S.), and Japan, a strategic move to capitalize on the burgeoning AI sector and secure future growth.

If TSMC's stock price is calculated at a price-to-earnings ratio of 18.5 times, as expected (close to the average over the past 10 years), the stock price may rise by about 30% within the next 18 months.

— AnalystsProjecting potential stock price appreciation based on valuation metrics.
DistantNews Editorial

Originally published by Liberty Times in Chinese. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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