NYSE:TSM Leads AI Chip Race – Can TSMC Stock Hit $250?

Taiwan Semiconductor Manufacturing Company (NYSE:TSM) has cemented itself as the backbone of the global semiconductor industry, particularly in the AI revolution. Recently, TSMC reached a significant milestone by achieving a market valuation of $1 trillion in Taipei, underscoring the pivotal role the company plays in meeting the rising demand for advanced semiconductors used in AI technologies. With TSMC trading at $197, will AI growth and foundry dominance push it to new highs?

Taiwan Semiconductor Dominates AI Chips

TSMC’s market position strengthens amid AI growth as the company is the exclusive manufacturer of Nvidia’s A100, H100, and upcoming Blackwell GPUs, along with AMD’s MI300 series and Apple’s latest M3 chips. With Nvidia (NVDA), Apple (AAPL), AMD (AMD), and even OpenAI relying on TSMC for cutting-edge chip production, the company's market dominance continues to expand. Advanced technologies revenue accounted for 74% of wafer revenue, showcasing strong demand for cutting-edge processes.

Key Business Developments and Financial Performance

TSMC’s earnings beat expectations, and second-quarter revenue increased by 17.8% sequentially in US dollar terms, reaching $30.1 billion, exceeding guidance. The following metrics highlight the company's operational strength:

• Revenue: Increased to $30.1 billion in USD terms.
• Earnings Per Share (EPS): TWD15.36, up 60.7% year over year.
• Gross Margin: 58.6% (compared to 53% in Q4 2023).
• Return on Equity (ROE): 34.8%.
• HPC Revenue: Increased 14% quarter over quarter, accounting for 60% of total revenue.

Valuation and Comparative Outlook

Despite AI tailwinds, TSMC trades at a forward PE of 19.6 for 2026, significantly lower than Nvidia’s 22x earnings multiple. At $197 per share, TSM stock remains far below its early 2022 highs, even though AI chip demand has surged since then. Here is how TSMC compares to its industry peers:

• TSMC (NYSE:TSM): 19.6x Forward P/E (2026), 28% Expected EPS Growth (2025).
• Nvidia (NASDAQ:NVDA): 22x Forward P/E (2026), 35% Expected EPS Growth (2025).
• Intel (NASDAQ:INTC): 28x Forward P/E (2026), 15% Expected EPS Growth (2025).
• Broadcom (NASDAQ:AVGO): 21x Forward P/E (2026), 18% Expected EPS Growth (2025).

While Nvidia commands a higher multiple due to its AI chip dominance, TSMC’s valuation looks extremely attractive given its stable revenue stream, foundry moat, and pricing power.

Strategic Expansion and Analyst Forecasts

With geopolitical tensions rising, TSMC is making major investments in the U.S., including Arizona fabs expected to begin mass production by 2025. The company plans to invest $165 billion in advanced semiconductor manufacturing in the US, indicating strong future growth potential. This shift is critical for reducing China-Taiwan geopolitical risk, which remains a concern for investors. Furthermore, TSMC’s N2 and A16 technologies are on track, with N2 expected to enter volume production in the second half of 2025.

Based on the one-year price targets offered by 17 analysts, the average target price for Taiwan Semiconductor Manufacturing Co Ltd is $251.93 with a high estimate of $300.00. Analysts expect a price target of $250-$260 within the next 12 months, reflecting a 22-26% upside. With AI chip demand accelerating and strong margin expansion, the stock remains a strong buy.