TSMC (TSM) AI Stock Analysis

• Market Cap: $846.57B
• Dividend Yield: 1.01%
• Average Volume (3M): 16.21M
• Price to Earnings (P/E): 24.9
• Beta (1Y): 1.62
• Revenue Growth: 35.45%
• EPS Growth: 47.97%
• Country: US
• Employees: 65,152
• Sector: Technology
• Sector Strength: 75
• Industry: Semiconductors
• EPS (TTM): 2.14
• Shares Outstanding: 5,186,547,000
• 10 Day Avg. Volume: 12,030,816
• 30 Day Avg. Volume: 16,211,760
• PEG Ratio: 1.81
• Price to Book (P/B): 5.97
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 29.79
• 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: $219.43
• Price Target Upside: 11.85% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 8

• Rating: 77 Outperform
• Price Target: ―

TSMC's overall score reflects strong financial performance and positive technical indicators, though tempered by valuation concerns and challenges highlighted in the earnings call. The company's robust revenue growth, strategic expansions, and leadership in AI demand are significant strengths. However, potential margin dilutions and sector-specific risks present notable challenges.

Positive Factors

AI and Market Expansion

TSMC reaffirmed that AI datacenter momentum remains strong, boosting leading-edge nodes and advanced packaging.

Revenue Growth

The company maintained its full-year revenue outlook of mid-20s percent growth.

Technological Leadership

TSMC's 2025 Technology Symposium in North America reinforced a positive view about its unwavering focus on technology leadership and manufacturing excellence.

Negative Factors

Cost and Tariff Concerns

Management admits that tariffs are certainly a concern for end market demand.

Gross Margin Pressure

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

Operational Challenges

Integrating another foundry's production lines is highly challenging due to differences in toolsets, configuration, and process flow, requiring significant operational hurdles to be overcome.

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 makes money primarily through its semiconductor manufacturing services, which involve producing integrated circuits (ICs) for its clients based on their designs. The company's revenue model is based on a 'fabless' foundry model, where clients design the chips and TSMC fabricates them using advanced process technologies. TSMC's key revenue streams include wafer fabrication services, where clients pay for the production of semiconductor wafers, and technology licensing. The company's advanced technology nodes, such as 5nm and 7nm processes, are in high demand, allowing TSMC to charge premium prices for these cutting-edge manufacturing capabilities. TSMC's significant partnerships with major tech companies like Apple, AMD, and NVIDIA contribute to its earnings, as these companies rely heavily on TSMC's expertise and capacity to produce their high-performance and specialized chips.

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
	EBIT
1.48T	1.32T	921.47B	1.12T	649.98B	566.78B
	EBITDA
2.20T	1.98T	1.45T	1.59T	1.09T	918.55B
	Net Income Common Stockholders
1.31T	1.17T	838.50B	992.92B	592.36B	510.74B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.70T	2.42T	1.69T	1.59T	1.21T	802.15B
	Total Assets
7.13T	6.69T	5.53T	4.96T	3.73T	2.76T
	Total Debt
986.98B	986.46B	956.26B	888.17B	749.07B	365.19B
	Net Debt
-1.72T	-1.14T	-509.17B	-454.64B	-315.92B	-294.98B
	Total Liabilities
2.53T	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
-351.21B	-346.30B	-204.89B	-200.24B	136.61B	-88.62B

TSMC Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 196.19
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• 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 196.19 is above the 20-day moving average (MA) of 181.29, above the 50-day MA of 170.35, and above the 200-day MA of 183.93, indicating a bullish trend. The MACD of 8.01 indicates Negative momentum. The RSI at 69.89 is Neutral, neither overbought nor oversold. The STOCH value of 86.63 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
AMAT	82 Outperform	$130.41B	19.54	36.37%	0.99%	6.12%	-5.66%
AMD	81 Outperform	$184.05B	82.14	3.90%	―	21.71%	99.00%
QCOM	80 Outperform	$161.81B	15.01	42.21%	2.25%	16.15%	32.28%
ASML	78 Outperform	$287.57B	31.19	55.21%	0.80%	16.46%	21.29%
TSM	77 Outperform	$846.57B	24.89	32.11%	1.01%	35.45%	47.97%
Sector *	61 Neutral	$11.41B	10.19	-7.05%	2.95%	7.46%	-10.52%
INTC	45 Neutral	$92.78B	―	-18.66%	2.42%	-3.97%	-562.40%