Taiwan Semiconductor Co., Ltd. (5425) AI Stock Analysis

Taiwan Semiconductor Co., Ltd.

(TPEx:5425)

Select Model

Rating:52Neutral

Price Target:TWD 70.00▼(-11.62% Downside)

Action:initiatedcoverage

Date:11/09/26

The score reflects an average-to-modest overall profile. Fundamentals are improving at the top line — revenue up roughly 21% to a record NT$17.95B with strong cash conversion and NT$1.91B of free cash flow — but profitability has deteriorated sharply, with net margin at 2.8% and return on equity at 6.7%, while leverage has roughly doubled since 2022 to a 0.75 debt-to-equity ratio. Technicals are the biggest near-term drag: the stock trades far below all key moving averages with a deeply negative MACD, indicating a sustained downtrend, though RSI and Stochastic readings show the shares are now heavily oversold. Valuation is a secondary consideration: the 25.5x P/E looks full against current earnings power, partly offset by a 2.92% dividend yield. Investors should look for evidence that higher volumes translate into recovering margins before the risk/reward materially improves. Earnings call and corporate event components were excluded for lack of data, with their weight redistributed across the remaining factors.

Positive Factors

Strong Revenue RecoveryThe sharp 2025 revenue recovery indicates renewed demand and volume growth after a softer period. Sustained sales expansion can improve operating leverage, support investment in semiconductor capabilities, and strengthen the company’s position across its served electronics markets over the coming quarters.

Negative Factors

Severe Margin CompressionThe large decline in net margin shows that strong revenue growth has not translated proportionally into earnings. Weaker profitability may reflect higher costs, pricing pressure, or an unfavorable mix, and it reduces the company’s ability to fund growth and absorb operating volatility.

Taiwan Semiconductor Co., Ltd. (5425) vs. SPDR S&P 500 ETF (SPY)

Market Cap: TWD 20.07B
Dividend Yield: 2.55%
Average Volume (3M): 12.14M
Price to Earnings (P/E): 26.9
Beta (1Y): 1.54
Revenue Growth: 7.28%
EPS Growth: 85.43%
Country: TW
Employees: 2,270
Sector: General
Sector Strength: 55
Industry: Semiconductors

Taiwan Semiconductor Co., Ltd. Business Overview & Revenue Model

Company Description

Taiwan Semiconductor Co., Ltd. (TSC) functions as a global producer and vendor, offering a wide range of discrete semiconductor devices and power integrated circuits. The company structures its operations around two primary divisions: Rectifier and B...

Taiwan Semiconductor Co., Ltd. Financial Statement Overview

Summary

A mixed profile. Cash generation is the standout strength (score 70): operating cash flow rose to NT$2.58B from NT$1.63B and free cash flow reached NT$1.91B, with operating cash flow roughly five times net income — evidence of strong earnings quality and self-funded capex. The income statement is only average (score 50): revenue rebounded about 21% to a record NT$17.95B, but margins eroded across every line, with gross margin at 29.5%, operating margin at 9.0% and net margin down to just 2.8% versus 13.9% in 2022. The balance sheet is adequate but more leveraged (score 55): debt-to-equity of 0.75 is roughly double the 2022 level, equity funds only about 36% of assets, and return on equity of 6.7% is far below the 27% peak. The company appears to be in the volume-building, debt-funded investment phase of the cycle, with profitability yet to follow revenue higher.

Income Statement

50Neutral

Balance Sheet

55Neutral

Cash Flow

70Positive

Financial statement breakdown
Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	18.21B	17.95B	14.83B	14.62B	15.69B	13.18B
Gross Profit	5.37B	5.29B	4.23B	4.49B	5.35B	4.13B
EBITDA	2.89B	2.73B	2.47B	2.91B	3.99B	2.84B
Net Income	724.46M	509.58M	463.85M	718.64M	2.18B	1.38B
Balance Sheet
Total Assets	22.06B	21.20B	21.54B	17.55B	18.22B	15.99B
Cash, Cash Equivalents and Short-Term Investments	3.72B	4.14B	3.95B	3.50B	4.20B	3.23B
Total Debt	5.41B	5.77B	6.28B	2.94B	3.10B	2.78B
Total Liabilities	11.16B	10.21B	10.60B	6.85B	7.49B	6.76B
Stockholders Equity	7.64B	7.64B	7.79B	7.74B	8.06B	7.03B
Cash Flow
Free Cash Flow	716.61M	1.91B	1.14B	2.22B	1.54B	1.28B
Operating Cash Flow	1.42B	2.58B	1.63B	2.53B	2.20B	1.99B
Investing Cash Flow	-503.44M	-803.26M	-3.15B	-1.41B	-691.52M	-756.78M
Financing Cash Flow	-1.31B	-1.67B	1.85B	-1.57B	-707.74M	-1.01B

Taiwan Semiconductor Co., Ltd. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (55)

Financial Indicators

TW:5425 against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TW:6138	76Outperform	TWD 15.99B	14.17	―	5.07%	18.18%	48.17%
TW:6719	69Neutral	TWD 17.20B	19.94	―	2.82%	-1.77%	94.13%
TW:3265	58Neutral	TWD 21.46B	22.56	―	2.60%	15.38%	34.04%
Sector *	55Neutral	$6.65B	3.83	-15.92%	6.20%	10.91%	7.18%
TW:5425	52Neutral	TWD 19.66B	26.95	―	2.55%	7.28%	85.43%
TW:3707	38Underperform	TWD 24.11B	-51.01	―	―	22.70%	38.31%
TW:2340	30Underperform	TWD 17.77B	-22.74	―	―	5.05%	34.85%

* General Sector Average

Performance Comparison

TW:5425 and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
TW:5425	Taiwan Semiconductor Co., Ltd.	79.20	27.85	54.24%
TW:2340	Taiwan-Asia Semiconductor Corporation	40.70	14.60	55.94%
TW:3265	Winstek Semiconductor Co. Ltd.	157.50	59.19	60.20%
TW:3707	Episil Technologies Inc.	60.20	9.00	17.58%
TW:6138	Anpec Electronics Corporation	216.00	-11.88	-5.21%
TW:6719	uPI Semiconductor Corp.	163.00	-32.78	-16.74%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.

Date of analysis: Nov 09, 2026

Taiwan Semiconductor Co., Ltd. AI Stock Analysis