Should You Buy TSM While It's Under $400?

Core Viewpoint - Taiwan Semiconductor Manufacturing (TSMC) shares have increased over 40% in 2025, with analysts predicting further growth, particularly with a price target increase from $300 to $400 by Susquehanna analyst Mehdi Hosseini ahead of Q3 earnings [1][2]. Group 1: Demand Trends - TSMC is witnessing accelerated demand for AI-optimized chips, with expectations of AI accelerator demand growing at a mid-40% compound annual growth rate through 2029, potentially exceeding forecasts [3]. - The exponential increase in token usage across AI models has led to a surge in demand for high-performance, energy-efficient chips, benefiting TSMC, as advanced nodes (7-nanometer and below) constituted 74% of its wafer revenues in Q3 [4]. Group 2: Financial Performance - In Q3, TSMC's revenues rose 41% year over year to $33.1 billion, while earnings per share increased by 50% to $2.91 [5]. Group 3: Future Catalysts - TSMC is expanding its chip-on-wafer-on-substrate (CoWoS) packaging capacity, with projections to reach 120,000 to 130,000 wafers per month by the end of 2026, up from 75,000 to 80,000 wafers per month [6]. - The company anticipates volume production of its N2P and A16 technologies to begin in 2026, potentially initiating a multiyear upgrade cycle in data centers, smartphones, and AI accelerators [7]. - TSMC's growing AI demand enhances long-term visibility for its foundry business, positioning the company for further share price gains in 2026 [8].