Needham Maintains Buy on TSMC (TSM), Citing Strong Margins and Upgraded AI Outlook

Core Insights - Taiwan Semiconductor Manufacturing Company Limited (TSM) is gaining attention as an AI stock, with a price target raised to $360.00 from $270.00 while maintaining a "Buy" rating due to strong third-quarter performance [1] Financial Performance - TSM's third-quarter revenue exceeded the high end of its guidance range, achieving robust gross margins of 59.5% despite previous concerns about foreign exchange impacts [2] - The company guided down fourth-quarter revenue by only 1% quarter-over-quarter, significantly better than the previously implied 10% decline, while maintaining gross margins at 60% [3] - TSM raised its full-year 2025 revenue growth forecast from 30% to 35% and narrowed capital expenditure guidance to $40-42 billion from $38-42 billion [3] Strategic Outlook - Analysts noted an incrementally stronger AI outlook for TSM, despite the closed nature of China's AI market [4] - The company is accelerating its Arizona build-out, with plans to acquire more land, increase N2 node implementation, and initially leverage Amkor Technology for packaging Arizona-produced wafers [4]