TSMC (TSM) AI Stock Analysis

• Market Cap: $1.11T
• Dividend Yield: 1.02%
• Average Volume (3M): 10.87M
• Price to Earnings (P/E): 30.2
• Beta (1Y): 1.67
• Revenue Growth: 38.65%
• EPS Growth: 57.18%
• Country: US
• Employees: 65,152
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 2.61
• Shares Outstanding: 5,186,523,000
• 10 Day Avg. Volume: 12,990,686
• 30 Day Avg. Volume: 10,874,004
• PEG Ratio: 0.72
• Price to Book (P/B): 7.84
• Price to Sales (P/S): 11.62
• P/FCF Ratio: 38.65
• Enterprise Value/Market Cap: 1.01
• Enterprise Value/Revenue: 0.36
• Enterprise Value/Gross Profit: 0.62
• Enterprise Value/Ebitda: 0.51
• 1Y Price Target: $283.11
• Price Target Upside: 0.14% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 9

• Rating: 77 Outperform
• Price Target: $264.00 ▼(-6.62% Downside)

TSMC's overall stock score reflects its strong financial performance and positive earnings call, which highlight robust revenue growth and strategic global expansion. While technical analysis and valuation present some concerns, the company's competitive advantages in advanced technology and market leadership position it well for future growth.

Positive Factors

Revenue Growth

TSMC's strong revenue growth, driven by demand for advanced technologies, indicates robust market demand and strengthens its market position.

Advanced Technology Leadership

Leadership in advanced process technologies like 3nm enhances TSMC's competitive edge, attracting high-value clients and sustaining long-term growth.

Global Expansion Plans

Global expansion with new fabs supports TSMC's capacity to meet increasing demand, particularly in AI and HPC, securing future revenue streams.

Negative Factors

Exchange Rate Challenges

Exchange rate fluctuations can adversely affect TSMC's revenue and profitability, posing a risk to financial performance stability.

Overseas Fab Margin Dilution

Margin dilution from overseas fabs, especially in Arizona, could impact profitability, challenging TSMC's cost management and efficiency.

Intellectual Property Risks

Intellectual property theft poses a risk to TSMC's competitive advantage and could lead to increased legal and security costs.

TSMC Business Overview & Revenue Model

Company Description

Taiwan Semiconductor Manufacturing Company (TSMC) is the world's leading dedicated semiconductor foundry, headquartered in Hsinchu, Taiwan. Established in 1987, TSMC specializes in manufacturing advanced semiconductor chips for a diverse range of sectors, including consumer electronics, automotive, telecommunications, and high-performance computing. The company serves a global clientele, providing cutting-edge fabrication processes and services that enable the production of integrated circuits and chips for various applications.

How the Company Makes Money

TSMC generates revenue primarily through its semiconductor fabrication services. The company operates on a business model where it manufactures chips for clients who design their own semiconductors, charging them based on the complexity and volume of the chips produced. Key revenue streams include contracts with major technology firms such as Apple, Nvidia, and Qualcomm, which account for a significant portion of TSMC's sales. Additionally, TSMC invests heavily in research and development to enhance its manufacturing processes and technologies, allowing it to offer state-of-the-art production capabilities, including advanced nodes like 5nm and 3nm processes. Partnerships with leading technology companies also bolster TSMC's earnings, as it plays a critical role in the global semiconductor supply chain, ensuring its clients have access to the latest manufacturing technologies. The increasing demand for high-performance chips in various sectors, including AI and IoT, further contributes to TSMC's revenue growth.

TSMC Financial Statement Overview

Summary

TSMC demonstrates strong financial health with robust revenue and profit growth, efficient operations, and a solid balance sheet. The company's low leverage and high equity ratio provide financial stability, while strong cash flow generation supports ongoing investments and shareholder returns.

Income Statement

TSMC shows strong financial performance with a consistent increase in total revenue, reaching TTM (Trailing-Twelve-Months) revenue of 3,140,917,320,000. The company maintains a high gross profit margin, currently at 57.43%, and net profit margin at 41.69%, indicating efficient cost control and profitability. The revenue growth rate from the previous annual report is 8.52%, showing positive growth. EBIT and EBITDA margins are robust at 47.12% and 69.93%, respectively, highlighting strong operational efficiency.

Balance Sheet

TSMC has a healthy balance sheet with a solid equity base, reflected in an equity ratio of 64.51%. The debt-to-equity ratio is low at 0.21, indicating low leverage and financial stability. Return on equity (ROE) is strong at 28.45%, showcasing effective use of shareholders' equity to generate profits. The high stockholders' equity and low total debt contribute to the company's strong financial position.

Cash Flow

TSMC's cash flow statement reveals strong cash generation with a free cash flow of 922,432,414,000 in the TTM period. The free cash flow growth rate is 6.00% from the previous annual report, indicating positive cash flow trends. The operating cash flow to net income ratio is 1.55, showing good cash conversion efficiency. The free cash flow to net income ratio is 0.71, reflecting the company's ability to generate cash relative to its net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.14T	2.89T	2.16T	2.26T	1.59T	1.34T
Gross Profit	1.80T	1.62T	1.18T	1.35T	819.54B	711.13B
EBITDA	2.22T	1.98T	1.52T	1.59T	1.09T	918.55B
Net Income	1.31T	1.17T	838.50B	992.92B	592.36B	510.74B
Balance Sheet
Total Assets	7.13T	6.69T	5.53T	4.96T	3.73T	2.76T
Cash, Cash Equivalents and Short-Term Investments	2.70T	2.42T	1.69T	1.59T	1.21T	802.15B
Total Debt	1.08T	1.05T	956.26B	888.17B	753.63B	367.79B
Total Liabilities	2.53T	2.37T	2.05T	2.00T	1.55T	910.09B
Stockholders Equity	4.56T	4.29T	3.46T	2.95T	2.17T	1.85T
Cash Flow
Free Cash Flow	922.43B	870.17B	286.57B	520.97B	262.72B	301.19B
Operating Cash Flow	2.04T	1.83T	1.24T	1.61T	1.11T	822.67B
Investing Cash Flow	-975.92B	-864.84B	-906.12B	-1.19T	-836.37B	-505.78B
Financing Cash Flow	-362.13B	-346.30B	-204.89B	-200.24B	136.61B	-88.62B

TSMC Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 282.71
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSM, the sentiment is Positive. The current price of 282.71 is above the 20-day moving average (MA) of 253.58, above the 50-day MA of 244.29, and above the 200-day MA of 205.38, indicating a bullish trend. The MACD of 10.65 indicates Negative momentum. The RSI at 75.23 is Negative, neither overbought nor oversold. The STOCH value of 83.11 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSM.

TSMC Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ASML	81 Outperform	367.91B	36.89	53.44%	0.72%	27.09%	40.94%
TSM	77 Outperform	$1.11T	30.15	33.29%	1.02%	38.65%	57.18%
AMAT	76 Outperform	160.48B	23.95	35.03%	0.85%	6.70%	-5.95%
AMD	73 Outperform	261.08B	92.60	4.75%	―	27.17%	108.67%
INTC	60 Neutral	145.81B	-6.55	-20.95%	0.43%	-3.72%	-2120.70%
GFS	53 Neutral	18.33B	-158.16	-1.01%	―	-0.65%	-114.26%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

TSMC Corporate Events

TSMC Reports Strong Revenue Growth in August 2025

On September 10, 2025, TSMC reported its net revenue for August 2025, which reached approximately NT$335.77 billion. This figure represents a 3.9% increase from July 2025 and a significant 33.8% rise from August 2024. The cumulative revenue from January to August 2025 was NT$2,431.98 billion, marking a 37.1% increase compared to the same period in 2024. These results highlight TSMC’s robust growth trajectory, reinforcing its strong position in the semiconductor industry and signaling positive implications for its stakeholders.

TSMC Adjusts Q1 2025 Cash Dividend Per Share

On May 13, 2025, TSMC’s Board of Directors approved a cash dividend distribution of NT$129,663,077,605, equating to NT$5.00 per common share for the first quarter of 2025. However, due to changes in the number of common shares outstanding, the dividend per share has been slightly adjusted to NT$5.00001754, with the payment scheduled for October 9, 2025. This adjustment reflects TSMC’s commitment to maintaining shareholder value despite minor fluctuations in share numbers.

TSMC Announces Board of Directors Change Effective September 2025

On September 1, 2025, TSMC announced a change in its Board of Directors as Mr. Chun-Hsien Yeh was appointed by the National Development Fund, Executive Yuan of Taiwan, to replace Mr. Chin-Ching Liu. This change reflects TSMC’s ongoing adjustments in its governance structure, potentially impacting its strategic direction and stakeholder relationships.

TSMC Announces Key Financial Activities and Shareholding Changes for July 2025

In August 2025, TSMC reported several key changes and activities for July 2025, including modifications in the shareholdings of its board members and significant shareholders, as well as the acquisition and disposition of fixed-income investments totaling NT$10.2 billion and NT$0.4 billion respectively. Additionally, TSMC issued unsecured bonds worth NT$12.3 billion with varied maturity periods and interest rates, reflecting strategic financial maneuvers to support its operations and market positioning.

TSMC Releases Mid-Year Financial Statements for 2025

On August 14, 2025, TSMC released its consolidated financial statements for the six months ended June 30, 2025, and 2024, along with an independent auditors’ review report. The review, conducted by Deloitte & Touche, concluded that the financial statements fairly present the company’s financial position and performance in accordance with the relevant regulations and standards. This release provides stakeholders with a transparent view of TSMC’s financial health and operational performance, reinforcing its position in the semiconductor industry.

TSMC Global Approves $10 Billion Capital Increase

On August 12, 2025, TSMC Global Ltd., a subsidiary of TSMC, approved a capital increase of up to US$10 billion from its parent company, subject to regulatory approval. This strategic move is expected to enhance TSMC’s financial capabilities, potentially strengthening its market position and benefiting its stakeholders.

TSMC Announces Q2 2025 Financials and Strategic Investments

On August 12, 2025, TSMC’s Board of Directors approved several key resolutions during their meeting. These included the approval of the second quarter 2025 financial results, which reported a consolidated revenue of NT$933.79 billion and a net income of NT$398.27 billion. The Board also approved a cash dividend distribution and significant capital appropriations to expand capacity and technology development, amounting to approximately US$20.66 billion. Additionally, the issuance of unsecured corporate bonds up to NT$60 billion was approved to finance capacity expansion and green initiatives, alongside a capital injection of up to US$10 billion into TSMC Global to reduce foreign exchange hedging costs.

TSMC Reports Strong Revenue Growth in July 2025

On August 8, 2025, TSMC announced its net revenue for July 2025, reporting a consolidated revenue of approximately NT$323.17 billion. This represents a 22.5% increase from June 2025 and a 25.8% increase from July 2024. The revenue for the first seven months of 2025 totaled NT$2,096.21 billion, marking a 37.6% increase compared to the same period in 2024. These figures highlight TSMC’s robust growth and strong market positioning, reflecting its significant impact on the semiconductor industry and positive implications for its stakeholders.

TSMC Appoints New Treasurer for Global Subsidiary

On August 2, 2025, TSMC announced the appointment of Alex Huang as the new Treasurer of TSMC Global Ltd., a significant subsidiary of the company. This change in leadership is expected to impact the financial management and strategic direction of TSMC Global Ltd., potentially influencing the company’s operations and its stakeholders.

TSMC Reports Key Financial and Shareholding Changes for June 2025

In July 2025, TSMC reported several key changes and activities for the month of June 2025. These included alterations in the shareholdings of its board members and executives, with notable changes such as a decrease in shares held by Senior Vice President Wei-Jen Lo and an increase by Vice President Jonathan Lee. Additionally, TSMC engaged in significant financial activities, including the acquisition and disposition of fixed-income investments and the issuance of unsecured bonds worth NT$14.1 billion. These developments indicate TSMC’s ongoing strategic financial management and could impact its market positioning and stakeholder interests.

TSMC Reports Strong Q2 2025 Financial Results Amidst Growing AI Demand

On July 17, 2025, TSMC reported robust financial results for the second quarter ending June 30, 2025, with a 38.6% year-over-year increase in revenue to NT$933.79 billion and a 60.7% rise in net income to NT$398.27 billion. The company’s earnings per share also saw a significant increase to NT$15.36. The growth was driven by strong demand for AI and HPC-related technologies, with advanced technologies accounting for 74% of total wafer revenue. TSMC’s outlook for the third quarter remains optimistic, with expected revenue between US$31.8 billion and US$33.0 billion, supported by continued demand for leading-edge process technologies.

TSMC Reports June 2025 Revenue with Yearly Growth

TSMC reported its net revenue for June 2025, which was approximately NT$263.71 billion. This figure represents a 17.7% decrease from May 2025 but a 26.9% increase from June 2024. For the first half of 2025, TSMC’s revenue totaled NT$1,773.05 billion, marking a significant 40% increase compared to the same period in 2024. The revenue growth highlights TSMC’s strong market position and its ability to capitalize on the increasing demand for semiconductor products.

TSMC Arizona Announces Leadership Change with New Director Appointment

On July 1, 2025, TSMC Arizona Corporation, a significant subsidiary of TSMC, announced a change in its leadership. Rick Cassidy stepped down as Director and Chairman, and Rose Castanares was elected to fill the vacancy on the Board of Directors, marking a significant shift in the company’s governance structure.

TSMC Announces Strategic Changes and Capital Investments in June 2025

In June 2025, TSMC reported several changes and updates affecting its operations and financials. The company announced changes in shareholdings among its board of directors and executive officers, along with significant capital appropriations for machinery and real estate investments. Additionally, TSMC disclosed the acquisition and disposition of fixed-income investments and the cancellation of a portion of its common shares, reflecting strategic adjustments in its asset management and capital structure.

TSMC Global Issues Shares to Parent Company

On June 25, 2025, TSMC Global Ltd., a subsidiary of Taiwan Semiconductor Manufacturing Co., Ltd., issued 10,000 shares with a par value of US$1,000,000 per share to its parent company, TSMC. This strategic move is likely to strengthen TSMC’s financial position and enhance its operational capabilities, potentially impacting its market standing and offering significant implications for its stakeholders.