TSMC: AI Demand Visibility Is Intact, But Margin Dilution Will Weigh On Sentiment

TSMC (TSM) remains a BUY, with a 15% upside to a $475 target, driven by robust AI-led demand and a clear technology roadmap. Despite a post-earnings dip on margin and CapEx concerns, TSM's advanced node visibility (N3/N2/A16) and customer lock-in underpin multi-year revenue growth. Margin dilution from overseas fab investments, especially Arizona, tempers near-term GPM forecasts, but is viewed as a strategic necessity for US demand. TSM's manufacturing expertise, process leadership, and customer relationships are expected to sustain its >90% advanced processor market share through 2030. Since my analysis in April , Taiwan Semiconductor Manufacturing Company Limited aka TSMC ( TSM ) stock has climbed 9%, outperforming the S&P 500’s 4%. As expected, in Q2 '26, TSMC delivered a solid