Taiwan Semiconductor Manufacturing Company Limited

(New York Stock Exchange)
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Bullish +65

TSMC Is Up 30% in a Year and 19% Off Its High: Take ... - Yahoo Finance

Advanced packaging Capacity expansion Financial outlook AI-generated analysis

πŸ“ˆ TSMC stock is up 30% in the past year but sits 19% below its October high following sector-wide sell-offs.

πŸ’° The company reported a record third-quarter revenue of $46.7 billion with gross margins at 66.4%.

πŸš€ Analysts expect TSMC's EPS to more than double from 2025 levels to reach $23.39 in 2027.

πŸ“… Management guided fourth-quarter revenue between $52.3 billion and $54.3 billion with a 44% growth outlook for 2026.

πŸ’Έ TSMC raised its capital expenditure budget to $60-$64 billion to fund fabs starting production in 2028 and 2029.

πŸ”¬ The company is ramping up its 2-nanometer technology, which CFO Wendell Huang highlighted as a key driver.

πŸ’Ή TSMC trades at a forward P/E of 16x, below its five-year average of 18x and its July 2024 peak of 25x.

🀝 Customers like AMD are paying up for capacity, with reports suggesting potential price hikes for CoWoS packaging.

⚠️ A primary risk involves the large capital bill for future fabs if AI spenders trim budgets before 2028 production.

πŸ“‰ TSMC's growth is driven by customer migration to new chips rather than memory price increases like Micron.

Bullish Signals
  • TSMC reported a record third-quarter revenue of $46.7 billion, up 41.2% year-over-year.
  • The company achieved a robust 66.4% gross margin in the quarter.
  • Analysts project EPS to more than double from 2025's $10.65 to $23.39 by 2027.
  • Management raised its 2026 revenue growth outlook to approximately 44%.
  • The stock trades at a forward P/E of 16x, which is below its five-year average of 18x.
  • TSMC increased its capex budget to $60-$64 billion to support advanced node ramp-ups.
  • Customers like AMD are willing to pay higher prices for scarce capacity and CoWoS packaging.
Risk Factors
  • The stock has fallen 19% from its October high due to sector-wide sell-offs triggered by Intel and Lam Research reports.
  • A significant portion of TSMC's capital spending is allocated to fabs not producing until 2028 and 2029, creating exposure if AI budgets contract before then.
  • Revenue fell 4.5% in NT dollars in 2023, the year following its last record capex cycle.
Full Analysis
TSMC stock has gained 30% over the past year but remains 19% below its October high following recent sell-offs in the chip sector driven by reports from competitors like Lam Research and Intel. Despite these market fluctuations, TSMC's fundamental business performance continues to strengthen, characterized by record revenue and robust analyst expectations for earnings growth through 2027. The company reported a record third-quarter revenue of $46.7 billion, representing a 41.2% year-over-year increase with gross margins at 66.4%. Management has raised its 2026 outlook to approximately 44% growth and provided fourth-quarter guidance between $52.3 billion and $54.3 billion, highlighting the steep ramp-up of their 2-nanometer technology. Analysts project TSMC's earnings per share (EPS) to more than double from 2025 levels to $23.39 in 2027. The stock currently trades at a forward P/E of 16x, which is below its five-year average of 18x, suggesting potential value ahead of the upcoming mid-January earnings report and October revenue release. TSMC's growth strategy relies on customers migrating to its newest chips rather than memory price hikes seen in competitors like Micron. The company has increased its capital expenditure budget to $60-$64 billion to support future fabrication plants, though this spending carries risk if AI budgets are trimmed before production starts in 2028 and 2029.