TSMC (TSM) AI Stock Analysis

• Market Cap: $1.20T
• Dividend Yield: 0.96%
• Average Volume (3M): 11.25M
• Price to Earnings (P/E): 33.3
• Beta (1Y): 1.68
• 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: 11,779,244
• 30 Day Avg. Volume: 11,249,471
• 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: 0.94
• Enterprise Value/Revenue: 0.33
• Enterprise Value/Gross Profit: 0.56
• Enterprise Value/Ebitda: 0.43
• 1Y Price Target: $290.50
• Price Target Upside: -3.94% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 9

• Rating: 80 Outperform
• Price Target: $332.00 ▲(9.79% Upside)

TSMC's overall stock score is driven by its strong financial performance and positive earnings call highlights, including robust revenue growth and strategic expansion plans. However, the high valuation and technical indicators suggest caution due to potential overbought conditions and exchange rate challenges.

Positive Factors

Revenue Growth

TSMC's robust revenue growth reflects its strong market position and ability to capitalize on increasing demand for semiconductor products, ensuring long-term financial stability.

Advanced Technology Leadership

Leadership in advanced process technology positions TSMC as a preferred partner for cutting-edge semiconductor manufacturing, securing future growth and competitive advantage.

Global Expansion Plans

Global expansion through new fabs enhances TSMC's production capacity and geographic diversification, supporting long-term growth and resilience against regional disruptions.

Negative Factors

Margin Dilution

Margin dilution from overseas fabs could impact profitability, challenging TSMC's ability to maintain its historically high margins over the long term.

Exchange Rate Challenges

Exchange rate fluctuations pose a risk to TSMC's revenue and profitability, potentially affecting its financial performance and strategic planning.

U.S. Regulatory Pressure

U.S. regulatory pressure to relocate production could increase operational costs and disrupt TSMC's supply chain, impacting its competitive positioning and profitability.

TSMC Business Overview & Revenue Model

Company Description

Taiwan Semiconductor Manufacturing Company Limited, together with its subsidiaries, manufactures, packages, tests, and sells integrated circuits and other semiconductor devices in Taiwan, China, Europe, the Middle East, Africa, Japan, the United States, and internationally. It provides a range of wafer fabrication processes, including processes to manufacture complementary metal- oxide-semiconductor (CMOS) logic, mixed-signal, radio frequency, embedded memory, bipolar CMOS mixed-signal, and others. The company also offers customer and engineering support services; manufactures masks; and invests in technology start-up companies; researches, designs, develops, manufactures, packages, tests, and sells color filters; and provides investment services. Its products are used in high performance computing, smartphones, Internet of things, automotive, and digital consumer electronics. The company was incorporated in 1987 and is headquartered in Hsinchu City, Taiwan.

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	3.40T	2.89T	2.16T	2.26T	1.59T	1.34T
Gross Profit	1.99T	1.62T	1.18T	1.35T	819.54B	711.13B
EBITDA	2.60T	1.98T	1.52T	1.59T	1.09T	918.55B
Net Income	1.46T	1.17T	838.50B	992.92B	592.36B	510.74B
Balance Sheet
Total Assets	7.01T	6.69T	5.53T	4.96T	3.73T	2.76T
Cash, Cash Equivalents and Short-Term Investments	2.63T	2.42T	1.69T	1.59T	1.21T	802.15B
Total Debt	1.01T	1.05T	986.40B	888.17B	753.63B	367.79B
Total Liabilities	2.39T	2.37T	2.05T	2.00T	1.55T	924.84B
Stockholders Equity	4.58T	4.29T	3.46T	2.95T	2.17T	1.83T
Cash Flow
Free Cash Flow	947.94B	870.17B	286.57B	520.97B	262.72B	301.19B
Operating Cash Flow	2.13T	1.83T	1.24T	1.61T	1.11T	822.67B
Investing Cash Flow	-1.03T	-864.84B	-906.12B	-1.19T	-836.37B	-505.78B
Financing Cash Flow	-388.74B	-346.30B	-204.89B	-200.24B	136.61B	-88.62B

TSMC Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 302.40
• 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 302.4 is above the 20-day moving average (MA) of 272.80, above the 50-day MA of 251.37, and above the 200-day MA of 208.89, indicating a bullish trend. The MACD of 12.77 indicates Negative momentum. The RSI at 79.59 is Negative, neither overbought nor oversold. The STOCH value of 80.73 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	$401.00B	39.52	56.14%	0.65%	27.09%	40.94%
TSM	80 Outperform	$1.20T	33.26	33.29%	0.96%	38.65%	57.18%
AMD	78 Outperform	$330.59B	117.26	4.70%	―	27.17%	108.67%
AMAT	76 Outperform	$173.29B	25.94	35.64%	0.77%	6.70%	-5.95%
INTC	63 Neutral	$172.01B	―	-19.24%	0.34%	-3.72%	-2120.70%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
GFS	57 Neutral	$19.80B	28.15	-1.01%	―	-0.65%	-114.26%

TSMC Corporate Events

TSMC Announces Strategic Investments and Shareholding Changes in August 2025

On September 25, 2025, TSMC reported several significant changes and approvals impacting its operations. In August 2025, there were changes in the shareholdings of TSMC’s board of directors and executive officers, with a slight increase in shares held by Vice President Jonathan Lee. TSMC also approved substantial capital appropriations for machinery equipment and real estate, totaling over US$20 billion, indicating a strategic investment in advanced technology and capacity expansion. Additionally, TSMC acquired NT$13.5 billion in fixed-income investments, reflecting its ongoing asset management strategy.

TSMC Arizona Announces Leadership Changes Effective October 2025

On September 25, 2025, TSMC Arizona Corporation, a key subsidiary of TSMC, announced significant leadership changes. Y.L. Wang will step down as Director, and Ray Chuang will assume the roles of both Director and CEO, effective October 1, 2025. These changes are part of a strategic realignment within the subsidiary, potentially impacting its operations and positioning within the industry.

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.