Taiwan Semiconductor Manufacturing (TSM) is expected to hold margins close to all-time high levels over the next few years, despite a multitude of meaningful cost headwinds, Wedbush said in a Thursday note.

While some of the company's margin strength can be attributed to favorable exchange rates, Taiwan Semiconductor's Q3 results are seen as a reminder of the company's "advantageous positioning as the only meaningful supplier of silicon built on the most advanced processes," Wedbush said.

Wedbush said Taiwan Semiconductor's Q3 gross margin of 59.5% topped the midpoint of the company's prior guidance by about 200 basis points, while the company's gross margin forecast of 60% at the midpoint was higher than the brokerage's prior expectation of 57.3%.

The analysts also said that the chipmaker's increasing US manufacturing presence should minimize risks from company specific tariffs.

Wedbush reiterated an outperform rating on the stock and a price target of 1,700 New Taiwan dollars ($55.45) for Taiwan-listed shares.

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