Bank of America said Taiwan Semiconductor Manufacturing Company Limited (TSM) is making solid progress at its Arizona manufacturing facility, where revenue increased 17% sequentially and 145% year over year. In response, BofA raised its price target on TSM to $590 from $490 and reiterated its Buy rating.

TSM shares opened at $430.33 on Tuesday, trading near the 52-week high of $479.00. Wall Street’s average price target for the stock stands at $524.25.

In a research note to investors, BofA analyst Haas Liu said TSMC’s U.S. manufacturing operations are “progressing well.” He wrote that the Arizona facility generated NT$45 billion in second-quarter sales, equal to 4% of TSMC’s total revenue. That figure marked a 17% sequential increase and a 145% year-over-year jump.

Liu also said the Arizona operation’s net profit margin, excluding government subsidies, was 38% in the second quarter of 2026. That compares with an approximately -90% loss margin recorded in 2025, highlighting a sharp improvement in operating performance.

TSMC’s board recently approved $29 billion in U.S. capital investments, roughly double the amount authorized a year earlier. Liu expects capital expenditures to reach the midpoint of TSMC’s 2026 guidance at $62 billion, with possible growth to $80 billion to $85 billion in 2027. The spending underscores how much of TSMC’s near-term execution is tied to expanding advanced capacity outside Taiwan while meeting customer demand for leading-edge chips.

Despite the company’s elevated spending, Bank of America said it expects TSMC’s gross margin to remain in the high-60% range. Liu pointed to strong demand for high-performance computing products and premium mobile processors as the main drivers supporting margins.

The analyst also forecast depreciation expenses will rise at about 20% annually between 2026 and 2028 as TSMC expands advanced and specialized manufacturing capacity. That expansion includes a strategic partnership with Sony for image sensor production, which is scheduled to begin in 2029.

Bank of America’s new $590 target implies about 37% upside from Tuesday’s opening price. The firm kept its Buy recommendation unchanged.

Broader analyst sentiment on TSM remains constructive. Of the analysts covering the stock, three rate it Strong Buy, 11 rate it Buy, and two rate it Hold. The average price target is $524.25.

Other recent calls have also been positive. Needham raised its target to $530 from $480 in late July, DA Davidson lifted its target to $500 from $450, and Zacks upgraded TSM to Strong Buy in mid-July. The only recent downgrade came from Weiss Ratings, which cut TSM from Buy to Hold on August 12.

Institutional investors have also added to their holdings. Ballentine Partners increased its TSMC position by 6% in the second quarter, buying 2,566 more shares to bring its total to 45,094 shares worth about $21.5 million. Other firms that expanded positions during the first and second quarters included Twin City Private Wealth, Graves Light Lenhart Wealth, and Wealthcare Capital Partners.

TSMC reported second-quarter earnings of $4.28 per share on revenue of $39.89 billion. The company posted a net profit margin of 50.31% and return on equity of 39.37%. Wall Street analysts expect full-year earnings of $16.44 per share.

Company insiders also bought shares during the period. Vice President Shyue-Shyh Lin purchased 1,000 shares at $74.13 on July 21, while Vice President Lipen Yuan bought 1,000 shares at $79.19 in late June.