TSMC Stock Testing $300 – Analyst Raises PT on Beat-and-Raise Expectation

TSMC's stock has rallied to $300 in recent sessions, experiencing a surge in investor confidence as robust financial performance and optimistic analyst forecasts paint a bright picture for the world's largest contract chipmaker.

Fueled by surging demand for artificial intelligence (AI) applications, TSMC appears poised to exceed expectations in the coming quarters. Susquehanna today raised its price target for TSMC to $400 from $300, reiterating a Positive rating on the stock.

The firm anticipates a “beat and raise” scenario when TSMC reports its quarterly results, driven by expectations that the fourth quarter of 2025 and the first quarter of 2026 will outperform consensus estimates and seasonal trends.

TSMC's shares have demonstrated significant upward momentum, reflecting the company's strategic positioning in the rapidly expanding AI and semiconductor sectors. The stock has outperformed the broader market, with gains of 15% over the past month, and 48.76% since the turn of the year.

The company announced a remarkable 30% year-over-year increase in third-quarter revenue, reaching T$989.92 billion (approximately $32.47 billion). This impressive growth is attributed to the escalating demand for AI-related applications, surpassing initial market expectations and aligning with TSMC's earlier guidance. This surge in revenue underscores the company's ability to effectively meet the evolving needs of the AI market and solidifies its position as a key enabler of technological advancements.

Morgan Stanley also increased its price target for TSMC, citing strong AI demand, stable foreign exchange rates, and pricing power. The firm anticipates TSMC will exceed its fourth-quarter 2025 revenue and gross margin guidance. Further bolstering the outlook, Morgan Stanley projects a price increase for TSMC's 3nm wafers in 2026 due to anticipated supply shortages.

TSMC's Q2 2025 earnings further highlight the AI-driven growth trajectory. The company reported a substantial 60.7% year-over-year increase in earnings per share (EPS) to NT$15.36, with revenue rising by 11.3% sequentially to NT$30.1 billion.

This growth is primarily propelled by strong demand in high-performance computing (HPC) and smartphone segments, particularly for advanced 3nm and 5nm node semiconductor chips. Notably, HPC applications, including AI-related chips, accounted for a significant 60% of revenue, up from 52% in the same quarter the previous year.

To address the escalating demand for AI processors, TSMC is accelerating its chip manufacturing operations. The company is expanding its Phoenix, Arizona campus and plans to build at least 15 new fabrication plants over the next several years. Capital expenditures are projected between $38–42 billion in 2025. Mass production for its 2nm “N2” process is slated to begin in late 2025, with commercial revenue expected in early 2026.