Quick Read
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TSMC (TSM) earns a BUY with a $516 price target, 27% upside, as AI demand exceeds its fab capacity at just 18x forward earnings.
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NVIDIA (NVDA) trades at 41x earnings versus TSMC's 26x, yet every AI chip NVDA ships runs through TSMC's fabs.
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Every AI accelerator starts as a silicon wafer, and most of the world's leading-edge wafers come from a single supplier. The 24/7 Wall St. price target for Taiwan Semiconductor Manufacturing( NYSE:TSM ) is $516.16. That means 27.09% upside from $406.13, and the model rates TSMC a buy with high confidence.
24/7 Wall St. Price Target Summary
| Metric |
Value |
|---|---|
| Current Price |
$406.13 |
| Price Target from 24/7 Wall St. |
$516.16 |
| Upside/Downside |
27.09% |
| Recommendation |
BUY |
| Confidence Level |
90% |
AI demand still exceeds TSMC's supply, earnings are growing faster than the valuation multiple, and the shares have pulled back from their highs. With 79% of wafer revenue coming from 7nm and below, TSMC controls the most valuable real estate in the AI supply chain.
A Sharp Monthly Pullback After a Record Quarter
TSMC fell 2.87% over the past week and 10.89% over the past month, but it is still up 34.8% year to date. The stock trades about 16.7% below its 52-week high of $487.47 and 53.6% above its low of $264.34.
The drop came after a strong third-quarter report on October 15. EPS of $4.60 per ADR beat the $4.46 consensus. Revenue of $46.72 billion rose 41.2% YoY and came in above the high end of guidance.
Management now expects full-year 2026 growth of about 44% in dollars. The one weak spot was gross margin, which slipped 1.3 percentage points sequentially to 66.4% on 2nm ramp costs.
Why Bulls See $584 and Beyond
The Street's consensus target stands at $584.39, with 6 Strong Buy and 14 Buy ratings against one Hold. On the October call, C.C. Wei said "demand is still far above our capability to supply today."
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He also suggested AI accelerator growth from the mid-to-high 50s CAGR "probably will be higher." TSMC expects N2 capacity to more than double in 2027, and A14 volume production is scheduled for 2028. Our 12-month bull case reaches $536.47.
Margins and Capex Are the Pressure Points
TSMC reiterated a 2026 capital budget of $60 billion to $64 billion and expects 2026 to 2028 spending to be significantly higher than in the prior three years. Margin dilution from overseas fabs could widen to 3%-4% as more U.S. capacity comes online.
Geopolitical risk tied to manufacturing concentrated in Taiwan remains a drag. Management is also planning carefully for 2027 as rising component prices squeeze consumer markets.
Still, the margin drop reflects investment in TSMC's newest node. Q4 gross margin guidance of 65% to 67% stays well above the long-term 56%+ target. Even our bear case of $432.68 means a 6.54% gain.
TSMC Trades at a Discount to the Chip Designers It Supplies
NVIDIA( NASDAQ:NVDA ) belongs here because its AI accelerators depend on TSMC's fabs. NVIDIA's latest quarterly revenue of $96.2 billion grew 105.85%, yet its 41x P/E is far higher than TSMC's.
Broadcom( NASDAQ:AVGO ) offers the custom-silicon angle. Its AI semiconductor revenue jumped 221% to $16.7 billion, and it also relies on outsourced manufacturing.
| Company |
Trailing P/E |
Latest Quarter Revenue Growth (YoY) |
|---|---|---|
| TSMC |
26 |
41.2% |
| NVIDIA |
41 |
105.85% |
| Broadcom |
N/A |
85.5% |
NVIDIA and Broadcom are growing faster, but every chip they ship adds to TSMC's revenue. We reverse-engineered what the early winners in this cycle looked like before their runs in a free playbook on finding the next Nvidia. Measured against those peers, the 24/7 Wall St. price target looks reasonable, and arguably conservative.
TSMC Earns a BUY at $516.16
The 24/7 Wall St. price target of $516.16 carries a buy rating with 90% confidence. What tips the scale is an 18x forward multiple on a business whose supply is sold out.
I'd view the stock favorably if 2nm margins stabilize within guidance. I'd grow cautious if hyperscaler capex slows or tensions around Taiwan rise. The model's base case points to upside from current levels.
| Year |
Price Target from 24/7 Wall St. |
|---|---|
| 2026 (current) |
$406.13 |
| 2027 |
$514.10 |
| 2028 |
$601.67 |
| 2029 |
$695.25 |
| 2030 |
$748.25 |
These base-case projections, measured each November, assume TSMC keeps executing on its 2nm and A14 roadmap. A slowdown in AI spending or a supply disruption in Taiwan could push results toward the bear path of $493.24 by 2030.
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Contact editorial@247wallst.com for any questions or corrections.
