Taiwan Semiconductor (TSM) is off to a strong start in 2025, with TSM stock climbing around 18% year-to-date (YTD). Surging demand for artificial intelligence (AI) chips and a solid first-quarter performance have helped fuel the rally, reinforcing the company’s position at the center of the semiconductor world. 

With roughly 67% of the global foundry market and about 90% of advanced chip production under its belt, Taiwan Semiconductor remains a go-to manufacturer for cutting-edge chips. The company’s deep ties with tech heavyweights — such as Nvidia (NVDA), Apple (AAPL), Broadcom (AVGO), and Advanced Micro Devices (AMD), who count on it for manufacturing custom AI accelerators and graphics processing units (GPUs) — continue to be a major growth driver. 

In fact, the stock received a fresh vote of confidence on July 1, when Needham raised its price target to a Street-high $270, citing strong AI-driven growth prospects in the upcoming years. That being said, can the stock continue to rise and reach that ambitious target by 2025? 

About Taiwan Semiconductor Stock

Founded in 1987, Taiwan Semiconductor was the first to establish the pure-play foundry model and has remained the world’s top dedicated semiconductor foundry ever since. The company operates globally across Asia, Europe, and North America. In 2024 alone, Taiwan Semiconductor delivered nearly 12,000 products to over 500 customers, highlighting its broad capabilities in advanced, specialty, and packaging services.

Commanding a hefty market capitalization of almost $1.2 trillion, shares of the chip giant have performed well this year, outperforming the broader S&P 500 Index’s ($SPX) 5.9% return in 2025. Even more impressive, TSM is up 37% over the past three months, easily beating the broader market’s 10% return.

Taiwan Semiconductor’s Q1 Earnings Snapshot

Taiwan Semiconductor kicked off fiscal 2025 on a high note, delivering standout first-quarter results on April 17. Revenue soared 35% year-over-year (YOY) to $25.5 billion, edging past Wall Street expectations. Even more impressive, net income jumped 60% to nearly $11 billion. This growth was powered by the booming demand for its advanced 3-nanometer and 5-nanometer nodes.

The first-quarter numbers highlight just how dominant the company's advanced chipmaking capabilities have become. Shipments of 3-nanometer chips made up 22% of total wafer revenue, while 5-nanometer and 7-nanometer chips contributed 36% and 15%, respectively. Moreover, advanced technologies — defined as "7-nanometer and more advanced technologies" — accounted for a commanding 73% of total wafer revenue. 

Profitability was just as impressive. Taiwan Semiconductor 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. Reflecting on the Q1 performance, CFO Wendell Huang said, “Our business in the first quarter was impacted by smartphone seasonality, partially offset by continued growth in AI-related demand.”

Looking ahead, the company is projecting another strong quarter in Q2 2025. Management expects revenue to land between $28.4 billion and $29.2 billion, signaling continued growth momentum. The firm is targeting a gross profit margin of between 57% and 59%, with operating margins ranging from 47% to 49%. Taiwan Semiconductor is gearing up to release its Q2 earnings on July 17. 

What Do Analysts Expect for Taiwan Semiconductor Stock?

Taiwan Semiconductor was in the spotlight earlier this week after Needham analyst Charles Shi boosted his price target on the stock to a Street-high $270, up from $225, while maintaining a “Buy” rating. Shi expressed confidence in the firm’s outlook for $90 billion in AI-related revenue by 2029, noting that the company may not require substantial unit volume growth to hit that goal. Instead, the analyst pointed to increased silicon content per package, driven by more compute dies and the shift to custom HBM base dies, as key factors supporting sustained AI revenue growth over the next four years. 

Overall, Wall Street’s confidence in TSM shows no signs of fading, as analysts continue to rally behind the stock with a bullish “Strong Buy” consensus rating. Of the 11 analysts offering recommendations, eight advocate for a solid “Strong Buy" rating, two suggest a “Moderate Buy,” and the remaining analyst gives a “Hold.”

The average analyst price target of $233.12 is on par with current levels. However, Needham’s Street-high target of $270 suggests the stock can rally as much as 16% from current levels. Driven by accelerating AI demand, strong financial performance, and growing Wall Street confidence, Taiwan Semiconductor appears well on track to reach the $270 mark.