Investment banks Morgan Stanley, UBS, and Goldman Sachs have provided optimistic forecasts for Taiwan Semiconductor Manufacturing Company (TSMC) (TSM, Financial), citing strong demand in high-performance computing (HPC) and cloud AI as key drivers. UBS expects TSMC's revenue to grow by 25% in 2025, while Goldman Sachs predicts a 26.8% increase, driven by advanced process technologies and AI demand.
Morgan Stanley analyst Charlie Chan forecasts a 5% revenue decline in TSMC's first quarter due to seasonal iPhone impacts, but expects the company to exceed its conservative guidance for 2025. In contrast, Goldman Sachs projects only a 2.2% decline in the first quarter, with annual revenue reaching a record high of 4180 billion New Taiwan Dollars (NTD) in 2025.
Goldman Sachs attributes TSMC's growth to advanced process technologies like 3nm and 5nm, as well as CoWoS packaging technology, which are expected to enhance profitability. The firm anticipates a gross margin increase from 56.1% in 2024 to 59.3% in 2025. UBS also highlights the role of HPC and cloud AI in driving TSMC's revenue growth, with a projected gross margin improvement to 58.5% in 2025.
Both firms acknowledge potential challenges from U.S. trade tariffs and the initial profitability of TSMC's overseas plants. Despite these, TSMC plans to update its long-term growth targets and expansion progress in upcoming analyst meetings. Goldman Sachs has raised TSMC's 12-month target price to 1355 NTD, with the current stock price at 1125 NTD.
