Needham Maintains Buy on TSMC (TSM), Citing Strong Margins and Upgraded AI Outlook

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the AI Stocks in the Spotlight This Week. On October 16, Needham analyst Charles Shi raised the price target on the stock to $360.00 (from $270.00) while maintaining a “Buy” rating. The rating affirmation follows TSM’s robust third-quarter performance.

TSM’s third-quarter revenue came in above the high end of the guidance range. Moreover, it delivered robust gross margins at 59.5% even though there were fears of an FX-driven erosion in the previous quarter.

It also guided down fourth-quarter revenue by a mere 1% quarter-over-quarter. This is significantly better than the previously implied 10% decline, while keeping its gross margins steady at 60%. TSM management also raised its full-year 2025 revenue growth forecast from an estimated 30% to 35% and narrowed its capital expenditure guidance to $40-42 billion from $38-42 billion.

The company’s AI outlook is incrementally stronger, noted the analysts, even if China’s AI market remains closed. The firm further added that TSM’s Arizona build-out is accelerating, with plans to acquire more land, increase N2 node implementation, and initially leverage Amkor Technology for packaging Arizona-produced wafers.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures and sells advanced chips used in artificial intelligence applications.

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Disclosure: None.