TSMC Defies Gruesome Geopolitical Odds With Friends in High Places

As an avid follower of semiconductor stocks, I’m genuinely excited by the recent momentum in Taiwan Semiconductor Manufacturing Company (TSM), widely known as TSMC. The stock has decisively broken above its key 50-week moving average—a technical milestone that’s hard to overlook.

However, my optimism extends far beyond chart patterns. TSMC is a pivotal force at the heart of the AI revolution, playing a crucial role in powering next-generation technologies. The company is aggressively expanding its global footprint with major facilities planned across Europe, the U.S., and most intriguingly, the United Arab Emirates.

For investors who recognize the strategic significance of technological leadership, TSMC is far more than just another chipmaker—it’s a cornerstone of global economic and national security. Given the confluence of positive factors surrounding TSMC stock, I’m confidently bullish on its chances of picking its way through the brewing geopolitical minefield to, ultimately, deliver strong shareholder returns for the next decade.

Reliable Financial Performance Attracts Further Investment

From a financial standpoint, TSMC’s performance in Fiscal 2025 has been nothing short of exceptional. In the first quarter alone, revenue surged by 35% year-over-year, reaching approximately $25.5 billion. This impressive growth has been fueled by strong and timely demand from high-performance computing and automotive sectors, more than offsetting temporary softness in the smartphone market. Notably, TSMC’s cutting-edge 3-nanometer process has become a meaningful contributor to revenue, further underscoring the company’s leadership in advanced semiconductor manufacturing.

Despite facing some operational headwinds, including an early-year earthquake, TSMC has maintained robust profitability. Non-GAAP gross margins came in at around 59%, significantly beating analysts’ subdued expectations. Management also remains highly optimistic about the near-term outlook, guiding for another strong quarter with an anticipated 38% year-over-year revenue increase in Q2.

Altogether, this powerful blend of rapid growth and resilient profitability signals that TSMC is far more than a cyclical beneficiary. It is a foundational force in the global tech ecosystem, building lasting competitive moats and firmly establishing itself as the dominant player in semiconductor manufacturing.

Ambitious Moves in Critical Global Markets

I’ve taken a deep interest in TSMC’s bold and rapidly unfolding global expansion strategy. The company’s landmark $100 billion investment in Arizona represents more than just a manufacturing footprint—it signals a decisive pivot by the U.S. toward strengthening domestic semiconductor resilience. While challenges such as elevated labor costs and project delays are to be expected, the long-term strategic value is substantial. This initiative cements TSMC as a foundational technology partner for the West and a central pillar of the emerging U.S. semiconductor ecosystem.

Equally impressive is TSMC’s growing presence in Europe. Its joint venture in Dresden, Germany—alongside Bosch, Infineon (IFNNY), and NXP Semiconductors (NXPI)—marks a transformative effort to reshape the continent’s semiconductor supply chain. With a total project cost of approximately €10 billion, half of which is backed by EU state aid, the partnership aims to reduce Europe’s reliance on external sources for advanced chips. This move is not only strategically sound but also enhances TSMC’s global resilience and influence.

Perhaps the most intriguing development is the proposed “gigafab” in the United Arab Emirates. TSMC is reportedly in discussions with Abu Dhabi’s sovereign wealth fund, Mubadala, which, if finalized, would signal a breakthrough expansion into the rapidly evolving tech ambitions of the Middle East. Though still speculative, this potential partnership could significantly extend TSMC’s geopolitical reach and strategic footprint.

Altogether, TSMC’s global initiatives reflect a visionary approach to navigating complex geopolitical and economic terrains. These moves aren’t just about scaling production—they’re about redefining the global semiconductor map, securing long-term relevance, and reinforcing TSMC’s status as a trailblazer in advanced manufacturing.

Technical Momentum Provides Enormous Return Potential

Technically speaking, TSMC’s recent price action represents an undeniably eye-popping bull pattern, drawing tremendous interest from institutional investors. The technical indicators, such as the Relative Strength Index, down in the mid-60s, suggest that TSMC has plenty of room for continued gains before becoming overbought.

In fact, even heavyweights such as Cathie Wood’s ARK Invest have recently increased their holdings in TSMC. This adds another dimension of institutional confidence that deserves the attention of retail investors. For me, the institutional dynamics tell a strong story about why TSMC will continue to compound returns impressively.

Taiwan is The Elephant in the Room

That said, while I remain optimistic about TSMC’s long-term prospects, the geopolitical risk surrounding China and Taiwan is both real and significant. The increasing military activity by China’s People’s Liberation Army in the Taiwan Strait cannot be overlooked. According to various intelligence reports, China is preparing for potential scenarios involving Taiwan, with a key timeline centered around 2027.

Should a military conflict occur, the consequences for TSMC would be severe. Its critical manufacturing facilities could face operational disruptions or even destruction, triggering a major shock to the global semiconductor supply chain. Based on my analysis, such an event could lead to a collapse in TSMC’s stock price, potentially as much as 60%.

Given the scale of this risk, it demands careful consideration. Even with a fundamentally bullish outlook, I believe it’s essential to have a clear risk-management strategy in place. This is not about fear—it’s about being realistic in the face of a complex and evolving geopolitical landscape.

Is TSMC a Buy or Sell?

On Wall Street, TSMC stock holds a consensus Strong Buy rating, supported by seven Buy ratings, one Hold, and zero Sells. TSMC’s average stock price target sits at $219.43, suggesting a potential upside of 13% over the next 12 months. Personally, I’m a bit more bullish, with my own price target closer to $250.

See more TSMC analyst ratings

Bold Investments Make the Best Returns

Overall, I remain firmly bullish on TSMC. This investment goes beyond financials—TSMC is a cornerstone of the global technology infrastructure. While the geopolitical risk tied to its location in Taiwan is both real and substantial, it’s a factor that strategic investors must weigh carefully.

For those capable of evaluating the balance between opportunity and geopolitical exposure, TSMC presents a rare and compelling proposition. Given the company’s dominant market position and long-term growth potential, my $250 price target feels not only reasonable but well within reach.