TSM Stock Rises after Analyst Predicts Higher Guidance and Capex
Complete. Here is the key summaryTSMC shares rose 1.1% after GF Securities analyst Jeff Pu predicted higher full-year guidance and capital expenditure during the upcoming Q2 analyst meeting. Pu raised his price target to NT$2,900 and upgraded earnings estimates for 2026-2027, citing strong AI chip demand. He forecasts significant revenue growth in Q2 and Q3, with expanded production of advanced nodes and potential price increases, despite risks from EUV machine shortages.
Taiwan Semiconductor Manufacturing (TSM) shares rose 1.1% in morning trading after GF Securities analyst Jeff Pu said the company is likely to raise its full-year guidance and capex at its Q2 analyst meeting. The world's largest contract chip manufacturer is scheduled to release its fiscal second-quarter results on July 16, followed by an analyst meeting.
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Pu reiterated his Buy rating on TSMC, while raising his price target from NT$2,808 to NT$2,900. Moreover, he increased his earnings per share estimates for 2026 and 2027 by 3% and 12%, respectively.
Wall Street expects TSMC to report Q2 2026 earnings of $3.81 per ADR, up from $2.61 in the same quarter last year. Revenue is expected to rise to $39.99 billion, up from roughly $35 billion in the March quarter.
Here's Why TSMC Could Raise its Outlook
Pu said that demand for TSMC's most advanced chips remains strong, backed by growing need for AI chips and powerful processors. He highlighted that TSMC started increasing its manufacturing investments in 2025, about 1.5 to 2 years after the AI boom began. This delay implies that TSMC could not fully keep up with demand, allowing some orders to go to competitors or remain unfilled. As a result, Pu expects TSMC to expand production of its advanced N5, N3, and N2 chip technologies even faster in the second half of 2027 and could also raise prices because of strong demand.
Pu expects TSMC's Q2 revenue to grow about 11% from the March quarter, slightly better than the company's own forecast of around 10%. He also expects TSMC's profit margin to remain strong at about 68%, which is higher than what both TSMC and Wall Street are expecting.
What GF Securities Forecasts for TSMC Q3
Looking ahead, Pu believes TSMC's Q3 revenue could grow another 13%, well above analysts' expectations of 9%. He also expects the company to maintain healthy profit margins and raise its full-year growth forecast from the current expectation of more than 30% annual revenue growth.
Additionally, Pu expects TSMC to spend about $56 billion on expansion in 2026 and $73 billion in 2027. However, he cautioned that a shortage of advanced EUV chipmaking machines could slow some of these expansion plans.
Is TSMC a Good Stock to Buy?
On TipRanks, TSM has a Strong Buy consensus rating based on six Buys and one Hold rating. The average Taiwan Semiconductor Manufacturing price target of $507.14 implies 16.2% upside potential from current levels. Year-to-date, TSMC shares have gained 44.4%.