TSMC (TSM) AI Stock Analysis

• Market Cap: $1.02T
• Dividend Yield: 1.11%
• Average Volume (3M): 11.38M
• Price to Earnings (P/E): 27.6
• Beta (1Y): 1.64
• Revenue Growth: 38.65%
• EPS Growth: N/A
• Country: US
• Employees: 65,152
• Sector: Technology
• Sector Strength: 96
• Industry: Semiconductors
• EPS (TTM): 2.61
• Shares Outstanding: 5,186,523,000
• 10 Day Avg. Volume: 10,756,895
• 30 Day Avg. Volume: 11,382,312
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.09
• Enterprise Value/Revenue: 0.36
• Enterprise Value/Gross Profit: 0.62
• Enterprise Value/Ebitda: 0.50
• 1Y Price Target: $269.00
• Price Target Upside: 10.12% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 8

• Rating: 77 Outperform
• Price Target: $279.00 ▲(14.21% Upside)

TSMC's strong financial performance and positive earnings call sentiment are the primary drivers of its overall stock score. The company's robust revenue growth, efficient operations, and strategic positioning in advanced technologies contribute significantly. However, the high valuation and technical indicators suggest caution due to potential short-term volatility.

Positive Factors

Earnings

2Q results beat expectations, with GPM aided by higher utilization and cost efficiencies.

Financial Performance

AI strength drives upbeat outlook and raises guidance.

Negative Factors

Overseas Expansion

Overseas fab plans could lead to annual gross margin dilution of 2-3% in the coming years, followed by 3-4% later on.

Tariff Risks

There are tariff risks which imply that fourth-quarter sales could decline.

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	3.14T	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: 244.29
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 244.29 is above the 20-day moving average (MA) of 240.10, above the 50-day MA of 227.07, and above the 200-day MA of 197.33, indicating a bullish trend. The MACD of 3.92 indicates Positive momentum. The RSI at 59.86 is Neutral, neither overbought nor oversold. The STOCH value of 73.17 is Neutral, 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
AMAT	82 Outperform	$151.23B	22.94	36.37%	0.88%	6.12%	-5.66%
ASML	82 Outperform	$282.43B	27.62	56.14%	0.91%	27.09%	40.94%
QCOM	78 Outperform	$159.66B	14.27	44.62%	2.24%	15.82%	34.20%
AMD	78 Outperform	$283.92B	100.70	4.70%	―	27.17%	108.67%
TSM	77 Outperform	$1.02T	27.56	33.29%	1.11%	38.65%	―
Sector *	61 Neutral	$36.31B	7.01	-9.37%	2.01%	7.73%	-9.28%
INTC	52 Neutral	$95.46B	―	-19.24%	2.29%	-3.72%	-2120.70%