TSMC(US:TSM) GUOTAI HAITONG SECURITIES·2025-10-17 11:25Investment Rating - The investment rating for TSMC is "Buy" [7][11] Core Insights - TSMC is experiencing strong demand for advanced processes, with a resilient gross margin. The company is currently in the early stages of the AI demand cycle [3][11] - The Q3 revenue in USD increased by 40.8% year-on-year to $33.1 billion, driven primarily by strong demand for advanced processes [11] - TSMC's Q4 guidance exceeds expectations, with projected revenue of $32.2 to $33.4 billion and a gross margin of 59% to 61% [11] - The company is optimistic about the AI growth prospects, noting that AI demand is stronger than three months ago [11] Financial Summary - Total revenue (in million NTD): - 2023: 2,161,736 - 2024: 2,894,308 - 2025E: 3,797,927 - 2026E: 4,883,180 - 2027E: 6,154,275 - Gross profit and margin: - 2023: 1,175,111 (54%) - 2024: 1,624,354 (56%) - 2025E: 2,261,172 (60%) - 2026E: 2,969,389 (61%) - 2027E: 3,766,416 (61%) [5][11] - GAAP net profit (in million NTD): - 2023: 837,768 - 2024: 1,172,432 - 2025E: 1,681,698 - 2026E: 2,193,663 - 2027E: 2,751,997 [5][11] Earnings Forecast and Investment Recommendations - Adjusted revenue forecasts for TSMC for FY2025E-FY2027E are 37,979/48,832/61,543 million NTD, with GAAP net profit forecasts of 16,817/21,937/27,520 million NTD [11] - The target price for TSMC's stock is set at $382 for FY2026, based on a PE ratio of 28x [11]