TSMC Stock Price Forecast - AI Foundry Powerhouse Near $370 With Room Toward $500

TSMC stock – core AI foundry with earnings and cash flow to match the hype

TSMC stock – price, trading range and what the current valuation really implies

TSMC stock is trading near the top of its history as the AI cycle matures. Recent prints show NYSE:TSM around $368.65, down about $5.44 on the day from a previous close of $374.09. The intraday range has stretched from roughly $322.10 to $380.00, while the 52-week band runs from about $134.25 to $380.00. At these levels, the company carries a market capitalization of around $1.56 trillion, a trailing P/E ratio near 34.95x and a dividend yield of roughly 0.91%.
On forward numbers the picture is more reasonable than the trailing P/E suggests. The forward non-GAAP P/E is around 23.1x, only slightly above the 1-year average multiple of about 22.86x and the 5-year average around 22.36x, and modestly richer than the 10-year norm near 19.79x. The stock has already delivered a huge move of more than +140% off the low near $134, yet the multiple is anchored on a meaningful earnings base instead of pure narrative. The price embeds high growth and high margins, but it does not assume a fantasy scenario that cannot be reconciled with the current P&L.

TSMC stock – pivot from handset supplier to AI infrastructure engine

The core of the story is the transition in what actually drives revenue. A few years ago, the business was heavily exposed to smartphone cycles, with Apple effectively setting the tempo for advanced-node demand. That structure has changed. After Q4 2025, Nvidia has overtaken Apple as the largest customer, shifting the center of gravity toward AI accelerators and data-center compute.
This shift is visible in the product mix. 3nm and 5nm technologies together account for about 63% of Q4 2025 revenue, up 3 percentage points year on year and a full 13 points above Q4 2023, when they contributed around 50%. High-performance computing and smartphones together deliver roughly 87% of overall revenue, but the incremental growth is dominated by AI-linked compute rather than mobile.
Management backs this structural change with explicit growth targets. Overall revenue is guided to expand at roughly +25% compound annually between 2024 and 2029, taking sales from about $90.08 billion to roughly $274 billion. Within that, AI-accelerator revenue is expected to grow at a mid-to-high 50s percent CAGR through 2029. That is consistent with external projections that AI infrastructure spending could reach $3–4 trillion by the end of the decade, and positions TSMC stock squarely on the critical path of that spend.

TSMC stock – node roadmap, foundry dominance and why the moat widens under AI

The technology roadmap is the spine of the equity story. 3nm is already in volume production, with 5nm capacity being shifted toward 3nm to lift average selling prices and keep utilization high. The next platforms – N2, N2P and A16 – are scheduled to reach volume from the second half of 2026, and should become meaningfully accretive from 2027 onward. These nodes target precisely the segments that are growing fastest: AI accelerators, top-end CPUs, networking silicon and premium mobile SoCs.
Market-share data confirms the advantage. TSMC controls about 72% of global foundry share in Q3 2025, up 3 points quarter-on-quarter and 6 points year-on-year. In the higher-value “foundry 2.0” segment, share is around 39%, up 1 point QoQ and 6 points YoY. That means the company is not only dominant; it is expanding its grip at the most advanced geometries where the economics are strongest. As process complexity increases, the number of credible alternatives shrinks, which reinforces the moat rather than diluting it.

TSMC stock – gross margin, net margin and capital efficiency at AI scale

The margin profile shows how different the AI era is from the old handset cycle. In Q4 2025, gross margin reached roughly 62.3%, an improvement of 2.8 percentage points versus the prior quarter and 3.3 points year on year, and a jump of about 16.3 points versus 2019, when gross margin sat near 46%. This reflects richer node mix, higher pricing and better leverage on leading-edge lines.
On the bottom line, 2024 net margin sits around 40.5%, up 1.7 points year on year and 8.2 points above the 2019 level of 32.3%. That margin is unusually high for a capital-intensive manufacturer and is closer to the profile of premium software than a traditional semiconductor plant.
Capital efficiency matches the income statement. Return on capital employed is estimated around 55.4% for 2025. With a growth reinvestment rate near 20%, the business can organically support about 11% annual growth even without multiple expansion. This is consistent with the historical record, where five-year revenue CAGR stands around 23.3% and net income CAGR near 25.7%, while ten-year revenue and earnings growth are about 16.3% and 19.1%, respectively. AI accelerates this trend rather than creating it from scratch.

TSMC stock – free cash flow, capex and the strength of a $66 billion net cash buffer

The AI capacity build-out is being funded from strength, not from a stretched balance sheet. Over the last five years, capex totals about $167 billion, with an additional $30 billion in R&D. Despite that heavy spend, the company sits on net cash of around $66 billion, which is 50.6% higher year on year and roughly four times the $13.61 billion held in 2019.
Per share, a reasonable forward free-cash-flow estimate is about $10.55. Using that as a base and applying a weighted average cost of capital of roughly 9.43%, a two-stage discounted FCF setup with 11% growth in the first stage and a terminal growth around 5.54% produces a fair value near $430 per ADR. That outcome does not require heroic assumptions; it largely rolls forward existing margins and reinvestment into a demand environment where orders and commitments already exist.
Even while funding new fabs in Taiwan and Arizona, TSMC stock maintains balance-sheet flexibility. That allows continued investment through the cycle, selective capital returns, and the ability to absorb short-term volatility without compromising the long-term build-out.

TSMC stock – EPS trajectory, long-term targets and the real upside from here

Earnings power ties the fundamental story directly to the share price. Based on 2024 revenue of roughly $90.08 billion and net margin of about 40.5%, the company is already generating substantial profit at scale. For 2025, adjusted EPS is around $10.65, up roughly 51.2% year on year.
Projecting forward with management’s growth framework, revenue could reach about $274 billion by 2029 if the +25% CAGR materializes. Holding net margins near current levels implies 2029 adjusted EPS around $21.40, roughly a 24.9% annualized gain from 2024. A more optimistic case, where net margin expands toward 45% as AI mix deepens, supports 2030-style EPS closer to $23.80, equivalent to about 27.5% CAGR over the period.
Translating those numbers into prices, a forward multiple of 23x – in line with the current forward P/E and only modestly above historical averages – yields a base-case target near $494 on $21.40 EPS and a bull-case zone around $550 on $23.80. From the current $368–$370 area, that implies roughly 50% upside to the base-case and around two-thirds upside to the more optimistic scenario, if growth and margins track this path.

TSMC stock – PEG ratio, peer comparison and why a premium multiple is justified

On growth-adjusted metrics, the valuation is more compelling than the headline trailing P/E. With a forward P/E around 23.1x and a three-year expected EPS growth rate near 21.8%, the PEG ratio sits around 1.05x. That is only slightly above the five-year average PEG of roughly 0.87x and close to the ten-year figure near 1.03x. For a company with dominant share at the cutting edge, double-digit ROCE, and 40%+ net margins, paying just over one times growth is far from excessive.
Relative to peers, the position is balanced. Logic and AI leaders often trade at higher absolute P/Es, while more cyclical memory and legacy foundries sit at lower multiples but carry more volatile earnings and weaker structural profitability. Representative figures show Intel around 96.2x P/E and a PEG near 1.92x, Samsung roughly 7.71x P/E with a 0.17x PEG, Micron around 12.49x and 0.16x, SK hynix about 5.57x and 0.13x, ASML close to 41.73x and 2.02x, Nvidia near 40.73x and 0.83x, and Broadcom around 32.17x and 0.84x. Against that backdrop, TSMC stock at 23.1x forward earnings and a PEG of about 1.05x with 72% foundry share and 39% advanced share looks like a rational premium rather than a bubble.

TSMC stock – geographic footprint, capex in Arizona and the geopolitical overhang

The geographic pattern of capex has both financial and political consequences. Core capacity in Taiwan remains the backbone of output, where the company benefits from scale, experienced engineers and a dense ecosystem of suppliers. At the same time, the accelerated build-out in Arizona is a deliberate hedge. It partially insulates the business from tariffs and export controls and strengthens alignment with US industrial and security priorities.
Over the last five years, the company has deployed $167 billion in capex and $30 billion in R&D while building that footprint, yet still increased net cash to $66 billion. That demonstrates that the capital program is being executed from a position of strength.
Geopolitical risk around Taiwan remains a real factor and is one reason the market is unlikely to apply the kind of stretched multiples seen on some pure-play AI names. However, the same risk is heavily mutual. The global AI, cloud and electronics stack cannot function without TSM capacity across both Taiwan and overseas fabs. That interdependence influences the behavior of all governments involved and acts as a stabilizing force in the background of the equity story.

TSMC stock – customer concentration, pricing power and insider behavior

Concentration among top customers is often presented as a risk, but here it also underpins pricing power. The largest buyers of cutting-edge wafers – Nvidia, Apple, AMD, Broadcom and the main cloud providers – are powerful, yet they are also deeply reliant on TSMC stock for advanced capacity. That dependence gives the foundry real leverage when it negotiates pricing, volume guarantees and priority at new nodes, which supports sustained high margins even as customers push to optimize their own cost structures.
Governance and insider actions are important given the scale of capital involved. Tracking ownership trends, share grants and transaction activity provides context on how management views long-term prospects and valuation. Detailed views on this front are available through
TSM stock profile and
TSM insider transactions,
where patterns in buying, selling and grant structures can be assessed alongside the company’s capital-allocation record. The combination of strong internal ownership incentives, disciplined balance-sheet management and a dominant industry position is central to the long-term case.

TSMC stock – technical setup, entry zones and a clear Buy stance with discipline on price

Technically, NYSE:TSM has already delivered a substantial move. From a 52-week low near $134.25 to recent highs around $380, the stock is up roughly +146% from the bottom of the range. With the current price near $368–$370, the chart is extended and momentum indicators point toward a stretched, but not yet exhausted, trend.
Historical trading behavior highlights a band around $270–$300 that acted as resistance ahead of the latest breakout and is now the logical support area on any larger pullback. Several valuation and technical frameworks point to a potential correction of around 13–15% from the highs being entirely normal within a broader uptrend. At today’s level, upside to a conservative DCF-based fair value near $430 is mid-teens, while upside to the $494–$550 range implied by 2029–2030 EPS scenarios approaches 50–65%.
The verdict follows from the data. On a multi-year horizon, TSMC stock is a Buy. The combination of 25% guided revenue CAGR, mid-to-high 50s percent AI-accelerator growth, gross margins above 60%, net margins around 40–45%, ROCE north of 50%, net cash of $66 billion and dominant advanced-node share justifies a forward multiple in the low-20s and supports substantial upside if execution remains on track. The only nuance is entry discipline. Partial exposure at current levels, with a plan to add on any rotation toward the low-$300s or the $270–$300 band, respects both the fundamental strength and near-term overextension.

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