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With artificial intelligence fueling upside, Taiwan Semiconductor (TSM) is still one of the hottest tech giants to buy and hold long-term. Furthermore, the company just posted strong earnings. EPS of $4.31 beat by $0.37. Revenue of $40.2 billion rocketed 33.7% higher year-over-year (YOY), beating estimates by $300 million. And analysts are still incredibly bullish. For example, Wedbush reiterated an “Outperform” rating on the stock, with a price target of NT$3,000 from NT$2,900, thanks to strong, growing demand for artificial intelligence chips.
And while the stock did pull back on the company's plans to increase its 2026 capital expenditures to between $60 billion and $64 billion, up from $52 billion to $56 billion, I’d use recent weakness as an opportunity to buy for the long haul.
TSM’s Full-Year Growth Outlook is Strong
The company now expects revenue to grow by more than 40% in 2026, which is higher than the 30% it had previously forecast. Better, TSMC Chairman and CEO C.C. Wei added that “The AI megatrend continues to drive the need for more and more computation, which supports the robust demand for leading-edge silicon. Our customers and customers-at-customers, who are mainly the cloud service providers, continue to provide us with their very strong signals and positive outlook. Thus, our conviction in the multi-year AI megatrend remains very high.”
In addition, the company announced plans to invest another $100 billion in its foundries in Arizona. CEO C.C. Wei says the investment will help fund advanced packaging facilities and the production of 2-nanometer chips. He added that the investment will help grow the U.S. semiconductor industry and strengthen supply chains. Plus, TSMC will continue investing in Taiwan by building 13 advanced manufacturing and packaging facilities over the next several years. He added that continued investments in both the U.S. and Taiwan will help the company maintain an important role in the global semiconductor industry while supporting innovation from its customers.
TSM Is a Key Player in the AI Revolution
The biggest reason investors are excited about TSMC is its connection to the AI boom. TSMC is the world’s leading chip manufacturer. It makes advanced semiconductors for some of the biggest technology companies in the world, including Apple (AAPL), Nvidia Corporation (NVDA), and Advanced Micro Devices (AMD), to name a few. Many companies design their own chips but rely upon TSMC to actually produce them.
In addition, as AI continues to grow, demand for powerful chips will only rise. After all, AI systems require significant amounts of computing power, which means companies will need more advanced semiconductors, benefiting Taiwan Semiconductor Manufacturing.
How Should Investors Play TSM?
For long-term investors, TSMC is a buy-and-hold on the future of AI and advanced technology demands. In fact, I’d take full advantage of the recent pullback, set it and forget it. Better, while you wait for the stock to appreciate, you can also collect its dividends along the way. The company declared a dividend of NT$7 a share (US$1.11 per American Depositary Receipt), which is payable on Oct. 8 to shareholders of record as of Sept. 22.
With earnings expected to remain strong, powerful AI chip demand, growth in data center spending, higher TSMC profit margins, and further progress in advanced chip technology, TSMC should be a long-term winner. Plus, according to analysts at Wedbush, TSMC still has plenty of upside growth ahead. For investors who believe AI will continue to grow, TSMC offers a way to invest in the technologies powering AI.
What Do Analysts Say About TSM Stock?
Of the 17 analysts covering TSM stock, 14 have a “Strong Buy” rating, two have a “Moderate Buy” rating, and one have a “Hold” rating, making for a consensus “Strong Buy" rating. The mean target price of $477.38 implies potential upside of 18.7% from current levels. Meanwhile, the high price target of $600 implies as much as 49.1% possible growth from here.
On the date of publication, Ian Cooper did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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