Taiwan Semiconductor Manufacturing Co. (TSM) is leading the semiconductor industry due to the growing demand for advanced chips. The stock has hit new highs, powered by a strong bullish cycle, as noted in the Elliott Wave analysis.
Since its low in 2022, TSM has rallied in a clear three-wave pattern: wave I peaked at $226.40, wave II dipped to $134.25, and wave III is now reaching new records, targeting between $301.59 and $341.06. This upward trend is expected to last until late 2025 or early 2026, followed by a wave IV correction, which could present another buying opportunity before aiming for a Fibonacci extension of $404.
On the weekly chart, TSM shows a strong pattern. Analysts view pullbacks as chances to buy, suggesting specific entry points after corrections. A disciplined strategy using a proprietary system can help enhance confidence in seizing future growth.
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With TSM experiencing a powerful bullish cycle, its entry into Wave III offers a clear opportunity. The stock has surpassed its previous highs and is aiming for the $301.59 to $341.06 range in the upcoming weeks and months. This upward movement is supported by strong fundamentals and technical analysis.
Recent data backs this move. TSM’s Q3 2025 earnings report, released in October, exceeded expectations with a 15% revenue surprise thanks to high demand for its 2nm chips. Additionally, the Semiconductor Industry Association recently reported a 45% year-over-year increase in global AI accelerator shipments for October 2025, benefiting TSM as a leading foundry.
The main strategy now should be to prepare for further gains, as Wave III is usually the strongest and longest wave. For those wanting to act on this trend, buying call options that expire in late Q1 2026 is a good way to capture the expected rise toward the $340 mark. This timeframe allows for developing the pattern without facing significant time decay.
With a corrective Wave IV pullback expected after this move, selling cash-secured puts during any notable dip is another smart strategy. A similar pattern occurred during the quick pullback in the summer of 2024, serving as a great entry point. Selling puts with strike prices near recent support levels enables traders to collect premiums while setting a favorable entry point for a potential long stock position.
Currently, the high implied volatility in short-term options makes selling premium appealing, while longer-dated calls still offer good value for riding out this bullish wave. Any minor pullbacks or consolidations in the next few weeks should be seen as opportunities to start or add to these bullish derivative positions. The path for completing Wave III appears to be the most likely outcome into early 2026.
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