TSMC’s Ambitious U.S. Expansion Fuels Analyst Confidence

TSMC US8740391003

A senior U.S. official has indicated that Taiwan Semiconductor Manufacturing Company's (TSMC) investment plans in the United States may be far more substantial than previously disclosed. Commerce Secretary Howard Lutnick suggested the world's leading contract chipmaker could ultimately channel over $200 billion into American facilities, potentially creating tens of thousands of jobs. This bullish outlook coincides with a prominent Wall Street firm upgrading its rating on TSMC shares to "Buy."

The investment thesis for TSMC received a significant boost recently with an upgrade from Wall Street Zen. This move aligns with a broader wave of positive sentiment from market researchers. The consensus rating among analysts currently stands at "Buy," with an average price target of $355. Notable adjustments include:
* Susquehanna maintains a "positive" rating with a $400 target.
* Needham raised its target from $270 to $360, reiterating a "buy" recommendation.
* Sanford C. Bernstein increased its target from $290 to $330, rating the stock "outperform."
* Barclays lifted its target from $330 to $355, with an "overweight" stance.

Currently, seven analysts explicitly recommend purchasing the stock, reflecting strong confidence in the company's strategic direction.

Commerce Secretary Points to Vast Investment Scale

During a CNBC interview on December 12, Secretary Lutnick expressed a view that TSMC's U.S. commitment could extend well beyond initial figures. He was critical of the initial CHIPS Act funding framework, commenting that providing $6 billion in subsidies for a projected $60 billion investment "was not right." Lutnick revealed that TSMC has already revised its planned investment to approximately $160 billion and suggested there is further room for growth.

The company's original commitment was $65 billion for three advanced fabrication plants, or "fabs," in Arizona. The first is already operational, with the other two under construction. Earlier in 2025, TSMC announced an additional $100 billion for three more fabs, two advanced packaging facilities, and a research center.

Robust Financials Driven by AI Demand

TSMC's strong financial performance underpins the optimistic analyst coverage. For the third quarter of 2025, the company reported earnings per share of $2.92, surpassing estimates by 33 cents. Revenue surged 40.1% year-over-year to $32.36 billion. The company also demonstrated impressive profitability, with a net margin of 43.72% and a return on equity of 34.34%.

Advanced process technologies, defined as 7-nanometer and smaller, now contribute 74% of total wafer revenue. The cutting-edge 3-nanometer node alone accounts for 23%. High demand for AI accelerators continues to create a supply bottleneck for TSMC's CoWoS advanced packaging technology. Notably, end customers of TSMC's clients are now approaching the chipmaker directly to secure production capacity, highlighting its critical position in the semiconductor supply chain.

Institutional Investors Increase Stakes

Major investment firms have been actively accumulating TSMC shares. Recent regulatory filings show Jennison Associates boosted its position by 26.7% to over 12 million shares. Alliancebernstein increased its holdings by 31.5% to nearly 8.9 million shares, while Brown Advisory raised its stake by a substantial 43.2%. In aggregate, institutional investors now hold approximately 16.5% of the company.

Market attention now turns to upcoming financial disclosures. December sales figures are scheduled for release on January 9, followed by full fourth-quarter results. Analysts project Q4 earnings of $2.80 per share on revenue of $32.7 billion, representing year-over-year growth of 27% and 24%, respectively.