Taiwan Semiconductor Manufacturing Company (TSMC) has positioned itself as a cornerstone of the global artificial intelligence (AI) infrastructure, manufacturing essential chips for leading companies in the sector. This influential role has translated into significant financial success for TSMC, with its stock appreciating by an impressive 104% over the past year, greatly outperforming the S&P 500’s modest 15% growth during the same timeframe. Currently, TSMC shares are trading at approximately $370, leading investors to speculate about the company’s ability to sustain this momentum and potentially reach the $500 mark.
The catalysts contributing to TSMC’s robust earnings growth suggest that this upward trend is likely to be maintained. Reports indicate that TSMC achieved a staggering 51% increase in earnings in 2025, amounting to $10.65 per share, fueled by a 36% rise in revenue. The exceptional growth in earnings outpaced revenue growth, underscoring TSMC’s substantial pricing power within the semiconductor market.
As the largest semiconductor foundry globally, TSMC commands approximately 72% of the pure-play foundry market, according to Counterpoint Research. Additionally, the company has a noteworthy presence in the Foundry 2.0 market—encompassing chip packaging, testing, and other services—holding just over a third of this sector. Counterpoint estimates that TSMC’s share in the Foundry 2.0 market grew to 39% in the third quarter of 2025, a six-percentage-point increase from the previous year, with its nearest competitor capturing only 6%. This commanding market share enhances TSMC’s pricing power and positions it favorably for future earnings growth.
Anticipating price increases for its chips, TSMC is expected to continue raising prices for major clients including Nvidia, Advanced Micro Devices, Broadcom, Qualcomm, and Apple through 2029. Consequently, analysts predict a 34% growth in TSMC’s earnings this year, followed by a gradual decline in growth rates in the subsequent years. However, analysts acknowledge the potential for TSMC to exceed these forecasts, as the company projects a 30% revenue increase for the year, with AI accelerator revenues anticipated to grow at a mid-to-high 50% rate through 2029.
Looking forward, TSMC’s earnings are expected to rise to approximately $19.24 per share by 2028. Should the company achieve earnings of $20 per share by then and trade at an earnings multiple of 25—akin to the S&P 500 index’s average—this would position TSMC’s stock price at $500. This scenario suggests a potential stock price increase of 35% from its current levels. Analysts believe that TSMC could reach this valuation within two to three years, possibly sooner, given its strong growth trajectory and market positioning that could warrant a premium valuation in the market.
