Taiwan Semiconductor: Q2 Earnings Could Be Another Step Toward $500

TSMC (TSM) remains a top beneficiary of AI infrastructure demand, with Q2 revenues of $39.6B near the high end of guidance. TSM's growth thesis is anchored in AI demand and the upcoming 2nm node, supporting annualized sales growth of 30% through 2028. Despite geopolitical and FX risks, TSM's EBITDA and free cash flow estimates have been raised, justifying a new price target of $504.14 (20% upside). I maintain a strong buy rating on TSM, as robust operational performance and future cash generation outweigh current macro and geopolitical pressures.

I consider TSM (TSM) to be the foundry with huge AI Infrastructure spending upside supporting my bullish view on the company. The company will report Q2 FY26 earnings on the 16th.