Goldman Sachs has slightly revised down its earnings forecast for Taiwan Semiconductor Manufacturing Company (TSMC) (TSM, Financial) for the first quarter of fiscal 2025. This adjustment reflects the impact of an earthquake that occurred in January. Additionally, due to limitations in AI server rack supply from ODMs and ongoing geopolitical uncertainties, Goldman has further reduced its shipment forecasts for TSMC's CoWoS by 2% for 2025 and 5% for 2026.
Regarding capital expenditure, the bank maintains its forecast of $40 billion for TSMC in fiscal 2025. However, it has lowered the 2026 projection from $46 billion to $45 billion, considering potential slowdowns in wafer plant expansions in Japan and Germany. Goldman Sachs identifies TSMC as a key driver in the AI sector and a clear leader in advanced nodes and packaging.
The bank expects TSMC to increase prices by 3% for nodes below 5nm and by 5% for CoWoS in 2026 to mitigate rising costs. Revenue growth in U.S. dollars is projected at 25.6% for 2025 and 15.9% for 2026. The earnings per share forecast for TSMC has been reduced by 2% for 2025 and 4.7% for 2026. Consequently, the target price for TSMC shares was lowered from $259 to $222, while maintaining a "buy" rating.
