The October raise to 44% 2026 dollar growth supports about $20 of 2027 earnings. At 22 times that is a $440 stock, a few percent above $424.50.
Key points
- 44% is the new 2026 dollar-revenue growth guide, implying about $176 billion of sales.
- $53.3 billion is the fourth-quarter revenue midpoint, 14% above the $46.7 billion third quarter.
- 22 times my $20.00 of 2027 earnings is $440, a 4% return from $424.50.
The call
The $424.50 price requires about $176 billion of 2026 sales, then 20% more in 2027, a 49% net margin, and a 21 times multiple on that profit. That is a full year of AI wafer demand already in the shares.
I expect the sales and the margin. I do not expect the multiple to expand once N2 and overseas dilution stay visible. Twenty-two times the same $20.00 of 2027 earnings is $440, a market-like twelve months.
Revenue history and my 2026-27 forecast ($ billions)Company USD reports through 2025; 2026-27E are mine from 44% growth then 20%.
Valuation
| Item | Figure |
|---|
| 2026E revenue | $176 billion |
| 2027E revenue | $212 billion |
| 2027E net margin | 49% |
| 2027E EPS (5.19 billion ADS) | $20.00 |
| Multiple | 22 times |
| 12-month target | $440 |
Twenty-two times is a premium to TSMC’s decade average because the foundry still owns leading-edge share. It is not a premium that should widen after a 39% twelve-month run. Downside if AI orders slip is larger than upside from a higher multiple, which is why this is a hold, not a buy.
Risks
- Cloud customers cut accelerator orders; watch HPC mix falling below 60% of sales.
- N2 ramp dilutes gross margin more than the guided 3 to 4 points; watch Q4 gross margin versus 65% to 67%.
- Taiwan or export disruption; watch any change in U.S. or China licensing language in the next 20-F.
What would change my mind
A 2027 revenue path clearly above $230 billion with gross margin still above 65% would justify keeping 24 times and a higher target.