Taiwan Semi stock price target raised to $275 from $249 at Barclays

Investing.com - Barclays (LON:BARC) raised its price target on Taiwan Semiconductor Manufacturing Company (NYSE:TSM) to $275 from $249 while maintaining an Overweight rating on the stock. The semiconductor giant, currently trading at $246.72 and commanding a market capitalization of nearly $1 trillion, has seen its shares surge 21% year-to-date according to InvestingPro data.

The firm cited TSM’s quarterly results that exceeded expectations, with approximately 75% of revenue coming from leading edge nodes (N7 and below). Barclays noted strength across all divisions, suggesting some pull-in from consumer-exposed segments. InvestingPro data shows impressive revenue growth of 39.86% over the last twelve months, with the company maintaining a robust gross profit margin of 57.41%.

Taiwan Semi upgraded its full-year guidance, which Barclays interpreted as confirmation that artificial intelligence demand remains strong. The company’s management indicated AI demand is "stronger" and they are working to increase supply to meet market needs.

Gross margins fell within the company’s guidance range, but Barclays pointed out that adjusting for foreign exchange effects, margins would have exceeded guidance. The firm attributed this to Taiwan Semi’s continued execution, productivity gains, and higher utilization rates during the quarter.

Barclays maintained its revenue estimates for 2025 and 2026 while modeling full-year gross margins at 57.5%, expecting a fourth-quarter decline driven by overseas fab expansion and N2 technology ramp-up costs. The firm identified the Section 232 investigation and potential pull-ins during the first half of 2025 as the main near-term risks for the company. Despite these challenges, InvestingPro’s comprehensive analysis rates TSM’s overall financial health as "GREAT" with a score of 3.49 out of 5. For deeper insights into TSM’s valuation and growth prospects, including exclusive ProTips and detailed financial analysis, check out the full Pro Research Report, available to InvestingPro subscribers.

In other recent news, Taiwan Semiconductor has reported significant updates regarding its financial outlook and operations. The company has revised its 2025 revenue growth forecast to approximately 30%, driven by strong performance in AI and high-performance computing segments. Needham highlighted Taiwan Semi’s quarterly earnings, which exceeded expectations, leading the firm to reiterate its Buy rating and raise its price target to $270.00. Meanwhile, Barclays maintained an Overweight rating with a $240.00 price target, noting that Taiwan Semi’s fiscal year 2025 guidance surpassed market expectations.

Stifel’s analysis pointed to a 34% year-over-year growth in capital expenditure for 2025, with a focus on AI demand and advanced technology nodes. Despite foreign exchange challenges, Bernstein SocGen adjusted its price target to $249.00, citing currency headwinds impacting revenue and margins. The firm still projects Taiwan Semi’s fundamentals to improve. Needham’s projections also suggest AI-driven revenue could significantly increase, with capital expenditure expected to grow from $40 billion in 2025 to $50 billion in 2027. These developments indicate a focus on AI growth and technological advancements, despite macroeconomic uncertainties and tariff-related concerns.

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