Analysts at Barclays just raised their price target on Taiwan Semiconductor (NYSE: TSM) Â to $275 with an "Overweight†rating. ...

Consistent with its recent streak of monthly revenue outperformance, TSMC (NYSE: TSM )( OTC:TSMWF ) has done it again with stronger-than-expected quarterly results. The company grew revenue by 41% y/y to $33.1 billion, outpacing the upper range of its previous guidanceAnalyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinio ...

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Analyst’s Disclosure:I/we have a beneficial long position in the shares of TSM, NVDA, AMD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whet ...

Core Viewpoint - Taiwan Semiconductor Manufacturing has demonstrated significant technical advancements this year, showcasing its leadership in the semiconductor industry [1] Group 1 - The company has delivered a technical clinic, indicating its strong performance and innovation in semiconductor manufacturing [1]

Core Insights - TSMC reported a 39.1% year-over-year increase in third-quarter profit, driven by strong demand for AI chips, and raised its 2025 revenue growth outlook for the second time this year [1][2][4] Financial Performance - TSMC's revenues reached NT$989.92 billion, exceeding the expected NT$977.46 billion, while net income was NT$452.3 billion, surpassing the estimate of NT$417.69 billion [3] - The company expects annual sales growth in the mid-30% range, a few percentage points higher than previous forecasts [2] Market Trends - The AI market is experiencing positive developments, leading to increased demand for semiconductor products, as noted by TSMC's CEO [4] - TSMC's stock has surged 75% over the past six months, significantly outperforming the S&P 500's 26% increase, bringing its market capitalization to $1.56 trillion [5] Valuation Metrics - TSMC's trailing P/E ratio is 34.74X, higher than the industry average of 29.72X, with a price/book ratio of 10.53X compared to the industry's 9.70X [6] Trade Relations - TSMC is monitoring U.S. tariff developments and may receive exemptions due to its significant investments in U.S. facilities [7] Investment Opportunities - Investors can consider TSMC through various ETFs, including SP Funds S&P World (ex-US) ETF, SP Funds S&P Global Technology ETF, and others, which have significant allocations to TSMC [8]

Group 1 - Taiwan Semiconductor Manufacturing Company Limited (TSMC) stock has increased approximately 32% to around $302 per ADR since July, outperforming the S&P 500, which rose about 7% [1] - The market is perceived to be underestimating TSMC's potential, indicating a positive outlook for the company [1] Group 2 - The analyst emphasizes a focus on investing in companies within oligopolistic sectors that have high barriers to entry, suggesting a strategic approach to investment in the semiconductor industry [1] - The investment philosophy prioritizes growth at a reasonable price, with a mid- to long-term investment horizon, which aligns with the characteristics of the semiconductor sector [1]

Investment 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]

Core Insights - The M5 chip represents a significant advancement in technology, but the real investment opportunities lie within its supply chain rather than the end products [1][2] - The semiconductor industry is characterized by a complex supply chain, with key players like TSMC and ASML playing crucial roles in the production of advanced chips [3][7] Supply Chain Dynamics - TSMC is the exclusive manufacturer of the M5 chip, utilizing a 3-nanometer process, positioning itself as a critical player in the semiconductor landscape [4][14] - ASML holds a monopoly on the extreme ultraviolet (EUV) lithography machines necessary for producing 3-nanometer chips, creating a significant barrier to entry for competitors [8][14] Market Opportunities - The demand for advanced chips is expected to grow, driven by applications in artificial intelligence, autonomous vehicles, and data centers, indicating a long-term investment opportunity in the supply chain [10][16] - The M5 Chip Supply Chain Investment Opportunities 2025 focuses on companies that provide the essential tools and infrastructure for chip production, rather than just consumer brands [10][14] Key Companies - Apple drives innovation with the M5 chip, benefiting from its scale and financial strength, which supports its supply chain partners [14] - TSMC serves multiple clients, providing broad exposure to the advanced chip market, making it a pivotal player in the semiconductor industry [14] - ASML's machines, costing over £150 million each, are critical for the production of next-generation chips, reinforcing its monopoly in the market [8][14]

Investment Rating - The report maintains a "Buy" rating for the company with a target price raised to $370 from $320 [1][5][7]. Core Insights - The company reported a 10.1% quarter-over-quarter revenue increase in Q3 2025, with a gross margin of 59.5%, exceeding guidance [1][12]. - For Q4 2025, the company expects revenue between $32.2 billion and $33.4 billion, with a gross margin forecast of 59%-61% [1][14]. - The company has raised its 2025 revenue guidance to a year-over-year growth of close to 35%, up from approximately 30% [1][14]. - The company expressed strong confidence in the growth of AI-related demand, expecting it to exceed previous guidance of a 40% CAGR from 2024 to 2029 [1][2]. Summary by Sections Financial Performance - In Q3 2025, the company achieved a revenue of $33.10 billion, with a gross margin of 59.5%, significantly above the guidance of 57.5% [1][12]. - The company’s capital expenditure for Q3 2025 was $9.70 billion [13]. AI Demand - The company noted that customers are requesting higher capacity due to increasing confidence in AI trends, with expectations for semiconductor demand growth to exceed the previously estimated CAGR of 40% from 2024 to 2029 [2][30]. - The company plans to increase investments in advanced nodes and packaging to meet the growing demand [2][30]. Global Expansion - The company is accelerating production in Arizona and has plans for additional facilities in Japan and Germany to support AI demand [3][31]. - The company expects a gross margin dilution of 1% to 2% in 2025 due to overseas factory ramp-up, which is an improvement from previous estimates [3][29]. Advanced Processes - The company is on track to achieve mass production of its N2 process in late 2025, with N2P and A16 expected to enter production in the second half of 2026 [4][32]. - The N2 series is anticipated to become a significant and lasting core node, enhancing the company's profitability [4][32]. Profit Forecast and Valuation - The revenue forecasts for 2025-2027 have been adjusted upward by 1.9%, 2.8%, and 0.4% respectively, with net profit estimates raised by 7.3%, 7.9%, and 6.1% [5][26]. - The company is assigned a 30x PE for 2026, reflecting its leading position in the semiconductor foundry market [5][26].