Investing.com -- Bank of America has lowered its price target for Taiwan Semiconductor Manufacturing, citing increased demand uncertainties linked to tariffs, though it maintained a Buy rating on the stock.

In a note to clients, BofA said it reduced its 2026 and 2027 earnings estimates for TSMC by 4.8% and 5.2%, respectively. 

“Accordingly, we cut our PO to NT$1,250/US$220 (from NT$1,300/US$240),” analysts wrote, attributing the revision to “increased demand uncertainties caused by tariffs.”

Despite the cut, BofA believes the stock’s recent correction has already priced in much of the downside. 

“TSMC’s valuation is now near trough vs. its historical 11-29x P/E range,” the firm said, adding that the company’s clarification around technology transfer concerns had helped ease investor fears. 

“TSMC clarifies it is not currently engaged with any JV or tech transfer/licensing/sharing discussions,” the bank added.

TSMC continues to forecast strong growth, supported by demand for artificial intelligence. 

“TSMC continues to guide for mid-20% revenue growth in USD terms in 2025, on strong AI momentum,” BofA noted. 

While demand is expected to normalize in 2026, the 2024–2029 compound annual growth rate for AI remains “strong at mid-40%.”

The firm also highlighted TSMC’s accelerating U.S. fab expansion, driven by customer demand. 

However, they note that overseas expansion is creating cost pressure. “TSMC acknowledged that GPM drag from overseas expansion will widen to 3-4ppt in later years…due to cost inflation and tariff-driven costs,” BofA wrote.

Still, the long-term outlook is said to remain constructive. “TSMC remains confident in achieving its long-term GPM target of 53%+,” BofA added, noting that capex guidance of US$38–42 billion underscores its belief in structural growth.

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