TSMC (TSM) AI Stock Analysis

• Market Cap: $973.51B
• Dividend Yield: 1.17%
• Average Volume (3M): 10.60M
• Price to Earnings (P/E): 28.9
• Beta (1Y): 1.63
• Revenue Growth: 35.45%
• EPS Growth: 47.97%
• Country: US
• Employees: 65,152
• Sector: Technology
• Sector Strength: 86
• Industry: Semiconductors
• EPS (TTM): 2.14
• Shares Outstanding: 5,186,523,000
• 10 Day Avg. Volume: 10,408,655
• 30 Day Avg. Volume: 10,595,943
• PEG Ratio: 2.11
• Price to Book (P/B): 6.97
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 34.75
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $231.63
• Price Target Upside: -0.84% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 9

• Rating: 77 Outperform
• Price Target: $255.00 ▲(9.16%Upside)

TSMC's strong financial performance and promising earnings guidance, particularly in AI demand and strategic expansions, are significant strengths. Technical indicators suggest bullish momentum, though overbought conditions warrant caution. Valuation metrics indicate a fair market position. Revenue declines and margin concerns from expansion plans are notable risks.

Positive Factors

AI Revenue Growth

Silicon content growth is an increasingly important driver for TSMC's AI revenue growth.

Revenue Growth

TSMC continues to guide for mid-20% revenue growth in USD terms in 2025, on strong AI momentum and a mild recovery across other end-markets.

Technology Leadership

TSMC is well positioned to benefit from the industry megatrends of 5G, AI, and HPC with TSMC’s tech leadership in both advanced nodes/packaging and global expansions.

Negative Factors

Cost Inflation

TSMC is accelerating its US fab plans, with P2 now expected to come online quarters earlier than its prior 2028 timeline, leading to wider GPM drag due to cost inflation and tariff-driven costs.

Currency Impact

The recent TWD appreciation could lead to GPM and revenue impact, but it is well anticipated by the market and should not hurt TSMC’s long-term value proposition or competitiveness.

Gross Margin Pressure

Higher overseas fab spending is expected to lead to greater gross margin dilution of 3-4% annually in a few years.

TSMC Business Overview & Revenue Model

Company Description

Taiwan Semiconductor Manufacturing Company Limited (TSMC) is a global leader in the semiconductor industry, specializing in the manufacture of integrated circuits and semiconductor devices. As the world's largest dedicated independent semiconductor foundry, TSMC provides a comprehensive range of production processes and technologies to clients in various sectors, including consumer electronics, automotive, telecommunications, and computing. The company is renowned for its advanced process technologies, such as the 5-nanometer and 3-nanometer processes, which are critical for producing high-performance and energy-efficient chips used in a wide array of electronic devices.

How the Company Makes Money

TSMC generates revenue primarily through its semiconductor manufacturing services, offering foundry services to a diverse client base that includes leading technology companies and semiconductor design firms. The company's revenue model is anchored in high-volume production of advanced chips, leveraging cutting-edge process technologies to meet the demands of sectors such as mobile and high-performance computing. A significant portion of TSMC's income is derived from long-term contracts with major clients, including notable partnerships with technology giants like Apple, AMD, and Qualcomm. These relationships enable TSMC to secure consistent orders and optimize its production capacity. Additionally, TSMC invests in continuous research and development to maintain its technological edge, further enhancing its ability to command premium pricing for its leading-edge manufacturing capabilities.

TSMC Financial Statement Overview

Summary

TSMC exhibits strong financial health with impressive revenue growth, high profit margins, and a robust balance sheet. Its low leverage and high equity ratio ensure financial stability, while healthy cash flow generation supports 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	986.98B	1.05T	956.26B	888.17B	749.07B	365.19B
Total Liabilities	2.57T	2.37T	2.05T	2.00T	1.55T	910.09B
Stockholders Equity	4.60T	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	-1.01T	-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: 233.60
• 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 233.6 is above the 20-day moving average (MA) of 215.53, above the 50-day MA of 195.26, and above the 200-day MA of 189.47, indicating a bullish trend. The MACD of 9.40 indicates Negative momentum. The RSI at 75.08 is Negative, neither overbought nor oversold. The STOCH value of 90.05 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	$305.78B	33.29	55.21%	0.96%	16.46%	21.29%
QCOM	81 Outperform	$178.23B	16.53	42.21%	2.19%	16.15%	32.28%
AMAT	80 Outperform	$152.48B	23.13	36.37%	0.97%	6.12%	-5.66%
AMD	80 Outperform	$220.69B	101.54	3.90%	―	21.71%	99.00%
TSM	77 Outperform	$973.51B	28.91	32.11%	1.17%	35.45%	47.97%
Sector *	69 Neutral	¥228.24B	14.40	7.64%	2.72%	9.13%	8.48%
INTC	47 Neutral	$99.67B	―	-18.66%	2.29%	-3.97%	-562.40%