On Friday, JPMorgan reiterated its Overweight rating on Taiwan Semiconductor Manufacturing Company (TSMC) (2330:TT) (NYSE:TSM) stock with a price target of NT$1,500.00. The firm's analyst, Gokul Hariharan, outlined three key drivers that he believes will propel TSMC's stock in the coming years.

With a market capitalization of $870.56 billion, TSMC currently shows a "GREAT" overall financial health score according to InvestingPro analysis, supported by strong fundamentals and market position.

Firstly, Hariharan expects strong revenue growth for TSMC, particularly from Generation Artificial Intelligence (Gen AI) technologies. TSMC's guidance suggests a compound annual growth rate (CAGR) of approximately 20% from 2024 to 2029, potentially increasing the company's revenue to around $220 billion by the end of the forecast period. This projection aligns with the company's current momentum, as evidenced by its impressive 22.65% revenue growth over the last twelve months.

Secondly, the analyst anticipates a potential for higher gross margins. This optimism is based on better pricing, improved yields, and the scaling up of overseas fabs. These factors could contribute to TSMC's gross margins reaching the low 60% levels during this upcycle, building upon its current gross margin of 54.45%. InvestingPro subscribers can access detailed margin analysis and over 30 additional financial metrics for TSMC.

Lastly, Hariharan predicts a higher price-to-earnings (PE) multiple for TSMC owing to a reduced Taiwan risk premium. This adjustment is expected as TSMC demonstrates its critical role in the global fabless semiconductor supply chain and its importance to the United States' domestic semiconductor manufacturing efforts.

The analyst also expressed confidence in TSMC's ability to achieve significant earnings per share (EPS) growth in the next two years, supported by robust revenue growth. The company has already demonstrated strong dividend performance with a 30.74% dividend growth and currently offers a 1.02% yield. Additionally, he forecasted a 20% dividend growth extending into 2026.

JPMorgan's stance remains bullish on TSMC, with a price target set for December 2025, aligning with the broader analyst consensus of 1.35 (Strong Buy) on InvestingPro.