TLDR
- Bank of America says TSMC’s US fab ramp is “progressing well,” with Arizona fab sales up 17% quarter-over-quarter and 145% year-over-year.
- BofA raised its price target on TSM to $590 and maintained a Buy rating.
- TSMC’s board approved $29B in US capital appropriations, up roughly 99% year-over-year.
- TSM opened at $430.33, near its 12-month high of $479.00, with an average analyst target of $524.25.
- Ballentine Partners increased its TSMC stake by 6% in Q2, bringing total holdings to 45,094 shares worth about $21.5 million.
TSM opened at $430.33 on Tuesday, close to its 12-month high of $479.00, as Bank of America doubled down on its bullish view of the chipmaker.
Taiwan Semiconductor Manufacturing Company Limited, TSM
BofA analyst Haas Liu said in a note to clients that TSMC’s US fab operations are “progressing well.” Arizona fab sales came in at NT$45 billion in Q2, up 17% quarter-over-quarter and 145% year-over-year, now accounting for 4% of TSMC’s total revenue.
Liu also estimated that TSMC’s net margins, excluding grants, held steady at 38% in Q2 2026 for its Arizona fabs. That compares to a loss position of around -90% in 2025, showing real progress on the ground.
TSMC’s board recently signed off on $29 billion in US capital appropriations, roughly double the year-ago level. Liu expects capex to hit the guide midpoint of $62 billion in 2026, with the potential to climb to $80-$85 billion in 2027.
Gross Margins Holding Firm
Despite heavy capital spending, BofA expects TSMC’s gross margins to stay solid at the high-60% range. Liu pointed to strong demand in high-performance computing and high-end mobile chipsets as the main drivers keeping margins healthy.
Depreciation costs are expected to grow at roughly 20% CAGR from 2026 to 2028, tied to the ramp in advanced and specialty technologies. That includes a planned joint venture with Sony for image sensor production, set to come online in 2029.
BofA raised its price target on TSM to $590, up from $490, while keeping its Buy rating. That implies upside of around 37% from Tuesday’s opening price.
Analyst Sentiment Remains Strong
The broader analyst community is largely on board. Of the firms covering TSM, three have a Strong Buy, eleven have a Buy, and just two have a Hold. The average price target sits at $524.25.
Needham lifted its target to $530 from $480 in late July. DA Davidson moved its target to $500 from $450. Zacks upgraded TSM to Strong Buy in mid-July.
The one note of caution came from Weiss Ratings, which downgraded TSM from Buy to Hold on August 12th.
On the institutional side, Ballentine Partners raised its TSMC position by 6% in Q2, adding 2,566 shares to bring its total to 45,094 shares, valued at around $21.5 million.
Several other firms also added to positions in Q1 and Q2, including Twin City Private Wealth, Graves Light Lenhart Wealth, and Wealthcare Capital Partners.
TSMC reported Q2 earnings of $4.28 per share on revenue of $39.89 billion, with a net margin of 50.31% and a return on equity of 39.37%. Analysts forecast full-year EPS of $16.44.
Insiders were also buying during the quarter. VP Shyue-Shyh Lin picked up 1,000 shares at $74.13 on July 21st, while VP Lipen Yuan bought 1,000 shares at $79.19 in late June.
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