Taiwan Semi stock price target raised to $290 from $249 at Bernstein

Bernstein SocGen Group raised its price target on Taiwan Semiconductor Manufacturing Company (TSM) to $290 from $249, maintaining an Outperform rating, citing a robust artificial intelligence (AI) outlook and improving non-AI segments. The firm projects TSM's 2025 US dollar revenue to grow 33%, exceeding company guidance, driven by strong AI demand extending into 2026 and early signs of non-AI recovery. This follows TSM's impressive Q2 2025 results, which saw EPS surge 60.7% year-over-year and revenue increase 11.3% sequentially, primarily fueled by high-performance computing and smartphone markets, underscoring the semiconductor giant's strong financial health and market position.

Analysis

Bernstein SocGen Group has materially increased its price target for Taiwan Semiconductor Manufacturing Company (TSM) to $290 from $249, reinforcing its Outperform rating based on an accelerating Artificial Intelligence demand cycle. The firm's analysis points to a 33% US dollar revenue growth forecast for 2025, a figure that is notably more optimistic than TSM's own guidance of 30%. This bullish outlook is underpinned by strong signals from cloud service providers indicating robust AI-related growth extending into 2026, a mild recovery in non-AI segments, and demand being pulled forward to mitigate potential tariff impacts. The thesis is further supported by TSM's recent impressive financial performance in Q2 2025, which saw earnings per share (EPS) surge by 60.7% year-over-year and sequential revenue grow 11.3%, driven by the high-performance computing and smartphone markets. While a slight decline in gross margin was noted, an improvement in operating margin alongside a high 35% return on equity and 39.5% LTM revenue growth underscore the company's strong operational execution and financial health. Bernstein's new target is based on a 23% earnings CAGR and a 19x forward P/E multiple.

Key Decisions for Investors

• Given the strong analyst upgrade, robust Q2 earnings, and revenue forecasts that surpass company guidance, investors may view the current momentum as supportive of a continued bullish position on TSM, with Bernstein's $290 target serving as a new valuation anchor.
• Key performance indicators to monitor include sustained demand from cloud service providers for AI hardware and confirmation of the nascent recovery in non-AI segments in upcoming quarterly reports, as these are the primary drivers of the upgraded forecast.
• Despite the positive outlook, investors should remain attentive to margin dynamics, specifically the noted slight decline in gross margin, and assess whether the 19x forward P/E multiple targeted by Bernstein adequately prices in the execution risk associated with the high growth projections.