💥 Is Taiwan Semiconductor Still a Buy Before $400?

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Hi Fellow Investors,

Taiwan Semiconductor Manufacturing (NYSE: TSM) continues to sit at the center of the global artificial intelligence supply chain.

Even after a strong rally in 2025, Wall Street believes the stock’s long-term growth story remains intact.

The key question for investors is whether buying TSM below $400 still offers compelling upside.

Key Points:

• TSMC’s accelerating AI-driven demand has materially improved long-term revenue visibility.

• Expansion of advanced CoWoS packaging strengthens its dominance in AI accelerators.

• New process nodes scheduled for 2026 could fuel another multiyear upgrade cycle.

Why AI Demand Is Reshaping TSMC’s Growth Outlook

Artificial intelligence workloads are driving unprecedented demand for advanced semiconductor manufacturing.

Customers are reserving capacity not only for current needs but also to support downstream AI expansion.

Management expects AI accelerator demand to grow at a mid-40% compound annual rate through 2029.

Advanced nodes of 7 nanometers and below already account for nearly three-quarters of wafer revenue.

This concentration highlights how deeply AI performance requirements align with TSMC’s technological strengths.

Financial Momentum Is Backed by Real Earnings Power

Explosive AI adoption is translating directly into financial performance.

Quarterly revenue surged more than 40% year over year, signaling sustained pricing and volume strength.

Earnings growth outpaced revenue as operating leverage kicked in across advanced fabs.

Gross margins near 58% underscore TSMC’s pricing power in leading-edge nodes.

Few global manufacturers can replicate this scale, efficiency, and margin profile simultaneously.

Advanced Packaging Becomes the Next Competitive Moat

Chip-on-wafer-on-substrate packaging has emerged as a bottleneck in AI accelerator production.

TSMC’s aggressive CoWoS expansion directly addresses this constraint.

Industry estimates suggest capacity could nearly double by the end of 2026.

This positions TSMC as an indispensable partner for AI chip designers.

Control over both leading-edge logic and advanced packaging creates a powerful ecosystem advantage.

Next-Generation Nodes Could Unlock Another Upgrade Cycle

The upcoming N2P and A16 process technologies are scheduled for volume production in 2026.

These nodes promise meaningful gains in performance, power efficiency, and transistor density.

Data centers, smartphones, and AI accelerators are all poised to benefit.

Such transitions historically trigger multiyear capital spending and design refresh cycles.

This timing aligns with analysts projecting continued upside into 2026 and beyond.

Strengths

• Dominant position in advanced process nodes makes TSMC indispensable to AI chip innovation.

• Expanding CoWoS capacity strengthens its role as a full-stack AI manufacturing partner.

• Massive scale and execution discipline support industry-leading margins and returns.

Weaknesses

• Heavy capital expenditures increase sensitivity to demand slowdowns.

• Geopolitical exposure tied to Taiwan remains a persistent headline risk.

• Valuation already reflects high expectations after a strong multiyear rally.

Potential

• AI accelerator demand could exceed management’s already aggressive forecasts.

• New node adoption may drive pricing power and margin expansion.

• A $400 share price becomes achievable if AI-driven earnings momentum continues.

Conclusion

Taiwan Semiconductor Manufacturing remains one of the most strategically important companies in the global tech ecosystem.

AI demand, advanced packaging, and next-generation nodes combine to create a powerful growth runway.

For long-term investors, buying TSM below $400 may still represent a compelling opportunity rather than a missed one.

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