Taiwan Semiconductor (TSM), the world’s largest contract chipmaker, is the quiet engine behind the artificial intelligence (AI) boom. As the go-to chipmaker for tech giants like Nvidia (NVDA), Advanced Micro Devices (AMD), and Intel (INTC), TSMC’s role in shaping the future of AI is unmatched. Last year, its AI-related revenue tripled, with even bolder projections ahead — a doubling in fiscal 2025.

Despite posting stronger-than-expected June-quarter revenue, TSM stock dipped slightly, reflecting cautious sentiment. June marked its second-lowest monthly sales this year with a month-over-month decline, raising some investor concerns. Yet shares have held relatively steady, signaling that the market may be shifting its focus beyond topline numbers. 

All eyes are on the bigger picture. That will arrive on July 17, when Taiwan Semiconductor reports its full Q2 earnings alongside Q3 and full-year guidance. As AI demand heats up, the report could reveal whether the chip titan’s momentum holds strong or falters, marking a turning point in the semiconductor story investors are closely tracking.

About Taiwan Semiconductor Stock

Founded in 1987, Taiwan Semiconductor pioneered the pure-play foundry model and never looked back. With a $1.2 trillion market capitalization, it remains the world’s top chip foundry, delivering nearly 12,000 products in 2024 alone to over 500 global clients. From Asia to North America, TSMC quietly powers the AI revolution, supplying the ultra-advanced, high-performance chips that drive today’s smartest tech.

This chip stock has been on a significant rise. TSM stock has surged 28% over the past 52 weeks, easily outpacing the S&P 500 Index’s ($SPX) 11% gain. In just the last three months, TSM has rocketed 50%, more than doubling the broader market’s rise. Momentum hit a peak after Needham lifted its price target, sending shares to a high of $237.58 on July 3.

TSM stock is priced at 24.3 times forward adjusted earnings, sitting below industry peers. That hints at hidden value, especially given Taiwan Semiconductor's dominant market role and accelerating growth in the AI-driven chip race.

Taiwan Semiconductor is not just about high-performance chips — it is also quietly rewarding patient investors. With a streak of uninterrupted dividends, TSMC raised the bar again on May 13, declaring another quarterly payout payable to the shareholders on Oct. 9. The annualized dividend of $2.13 translates to a forward yield of 0.93%.

Taiwan Semiconductor’s Stellar Q1 Earnings Report

Taiwan Semiconductor kicked off fiscal 2025 with a statement, releasing its Q1 earnings report on April 17. The report not only beat expectations but reinforced its leadership in advanced semiconductor manufacturing. Revenue surged nearly 42% year-over-year (YOY) to $25.5 billion, while EPS soared 60% to $2.12 per share, driven by demand for the firm's cutting-edge 3-nanometer and 5-nanometer process nodes.

The strength of Taiwan Semiconductor's tech showed in the numbers. 3nm chips accounted for 22% of wafer revenue, 5nm made up 36%, and 7nm added another 15%. Altogether, advanced technologies contributed a dominant 73% of total wafer sales. High-performance computing (HPC) continued to lead, rising 7% sequentially to comprise 59% of revenue. Finally, smartphones slipped 22%, contributing to 28% of revenue, while automotive grew 14% and IoT dipped 9%, both representing 5% of revenue.

Profitability was impressive, too. The chip giant reported a gross margin of 58.8%, an operating margin of 48.5%, and a net profit margin of 43.1%, reflecting the strong demand and pricing power that underpin its cutting-edge manufacturing processes.

TSMC reported June revenue of NT263.7 billion ($9 billion), marking a 17.7% drop from May and the second-lowest monthly total in 2025. However, sales rose 26.9% YOY, underscoring resilient demand. Management remains optimistic, viewing the June decline as a brief pause in an otherwise strong uptrend.

Taiwan Semiconductor Fans, Mark Your Calendars for July 17

After a surprising dip in June revenue, all eyes are now locked on July 17, when Taiwan Semiconductor will unveils its full Q2 earnings along with guidance for Q3 and the full year. Management projects a strong quarter, estimating Q2 revenue between $28.4 billion and $29.2 billion, a 13% sequential boost fueled by relentless demand for its chips.

Gross margin is pegged between 57% and 59%, with operating margin between 47% and 49%. To match the pace of robust AI-related demand, TSMC plans to double its CoWoS capacity in 2025. The company is also rolling out a $100 billion expansion plan in Arizona.

Wall Street is even more bullish, eyeing $30 billion in revenue and 60% EPS growth to $2.37. Looking ahead, analysts expect profits to rise 35% this year and climb another 15% in fiscal 2026.

Wall Street's Bullish Bet on TSMC

Earlier this month, Taiwan Semiconductor stepped back into the spotlight after Needham analyst Charles Shi raised his price target to $270 from $225 while sticking with a “Buy” call. Shi was not just chasing headlines, but envisions a clear path to $90 billion in AI-related revenue by 2029. Surprisingly, it's not about shipping more chips, but about packing more power into each one. With rising silicon content per package, fueled by custom HBM base dies and additional compute layers, Shi believes TSMC is positioned to ride the AI wave without relying on a massive volume boost. 

Analysts are highly bullish on TSM stock overall, with a solid “Strong Buy” consensus rating. Out of the 11 analysts with coverage, eight recommend a “Strong Buy,” two advise a “Moderate Buy,” and one analyst maintains a “Hold” rating. 

The mean price target of $243.50 suggests that the stock could rally as much as 3% from the current price levels. Meanwhile, the $270 Street-high target indicates that the stock can rally as much as 14% from current levels.