Breaking Down Taiwan Semiconductor's Earnings and Future Upside

Key Points

• Even during tariff uncertainty and a potential trade war with China, shares of Taiwan Semiconductor are still the prime stock pick today. 
• With earnings showing investors why the stock should be worth a lot more, the upside is undeniable. 
• Wall Street analysts call for nearly triple-digit upside from today's discounted prices.

Most investors in the market today have woken up to the fact that the technology sector might have to endure a lot more volatility and uncertainty in the coming months and quarters. The reason behind this theme is that President Trump's current trade tariffs, which are mostly focused on Chinese exports, have caused uncertainty in most portfolios and market outlooks.

Considering that most chipmakers in the stock market operate out of Chinese factories, some of these fears are justified, but only to a certain point. Over the past couple of weeks, investors have also realized where the pain points lie, where the bottlenecks of sentiment shaped up and forced the President’s hand into concession, a concession that came in the form of exempting Chinese chip exports from these trade tariffs.

Now that the skies are clearing up a bit for the industry, a new path might be paved for further upside for investors to take advantage of.

With this in mind, investors would greatly benefit by reasoning in the importance and pivotal role that shares of Taiwan Semiconductor Manufacturing NYSE: TSM play in the space and how its most recent quarterly earnings results could shape the future upside of the stock’s price.

Starting With What Matters: Fundamentals

Taking a macro view on Taiwan Semiconductor stock, one thing is undeniable in today’s global technology setup: Without Taiwan Semiconductor, there would not be NVIDIA Co. NASDAQ: NVDA, Apple Inc. NASDAQ: AAPL, or so many other operators and consumer electronics companies in the market today.

Having such a strong presence in the industry allows Taiwan Semiconductor to command pricing power and remain one of the kings of the space for good reason. Perhaps this is why President Trump recently decided to exempt semiconductors and chips from the trade tariff rollouts.

Bearish traders in this name were clinging to the fact that these tariffs would slow Taiwan Semiconductor’s business in the future, negatively affecting earnings and, therefore, its valuation. However, now that the biggest objection and fear seem to be mostly out of the way, not by reaching a deal but by clearing the exemptions, this stock has a chance to show markets how much it’s worth.

Earnings Roundup: Where Is Taiwan Semiconductor Stock Going?

In the company's quarterly earnings presentation, investors can notice that management did mention the potential effect of tariffs, but not in the way that most would have thought. There were no talks of fear, nor any talks of lowering (even postponing) guidance for finances moving forward.

Knowing that the company's leaders are not that afraid of the worst-case scenario that everyone else started to price in is a great start, but there’s a lot more to know within the release's data. Revenues for the past year grew by as much as 40%, not the kind of push that is to be expected from a business on the brink of a trade war.

Then, as was already mentioned, the company’s pricing power and sheer market share enabled it to retain enough of this revenue to post just over 60% growth in annual earnings per share (EPS), which is what most investors understand will be the main underlying driver of the company’s stock valuation.

Of course, this sort of EPS growth over a single year becomes severely disconnected from the sort of performance clocked in by the stock itself during the same period. This is where savvy investors can start to feel an opportunity brewing, especially as what was expected to be the worst quarter of the year turned out to be red hot.

Today, Taiwan Semiconductor stock trades closer to 65% of its 52-week high levels, which is where every bear thought the stock should trade under the assumption that these tariffs would destroy volumes and new orders for the company. Yet, they did not, and now they are mostly out of the company’s way via the exemptions made by President Trump.

The Market’s Take on Taiwan Semiconductor Stock

Apart from the EPS growth and the asymmetric opportunity in this stock due to how low it trades relative to 52-week high levels, investors can look to where the rest of the market is looking to take Taiwan Semiconductor stock in the future.

One example of this gauge can be where Wall Street analysts see the stock headed.

As of April 2025, the consensus price target on Taiwan Semiconductor has remained at $220 per share, which calls for up to 50.2% upside from today's level. However, that is still not the best reflection of these expectations for the company.

On the day of the earnings announcement, analysts at Susquehanna decided to reiterate a Positive rating on the stock but also kept a much higher $250 per share valuation.

They called for a 70.6% upside, which doesn’t seem unrealistic at all considering how much needs to be corrected.