TSMC: The Winner in the AI Era
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Should l Buy TSM?
Source: Fool
- Market Growth Potential: According to Fortune Business Insights, the AI market is projected to grow from $375.9 billion this year to $2.48 trillion by 2034, representing a compound annual growth rate of 26.6%, which presents significant opportunities for related companies.
- TSMC's Industry Position: As the world's largest semiconductor foundry, TSMC produced over 11,800 products across 288 different processes in 2024, demonstrating its unparalleled influence and customer base in the industry.
- Strong Financial Performance: TSMC reported fourth-quarter revenue of $33.73 billion, a 25.5% increase year-over-year, with a profit margin of 48.3%, indicating robust profitability in a rapidly growing market.
- Technological Advancements and Market Demand: TSMC derived over half of its revenue from chips larger than 7 nanometers in 2023, but has significantly increased production of 3nm and 5nm chips, which now account for 28% and 35% of total shipments respectively, showcasing its agility in adapting to technological advancements and market demand shifts.
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Analyst Views on TSM
Wall Street analysts forecast TSM stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for TSM is 313.46 USD with a low forecast of 63.24 USD and a high forecast of 390.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
8 Analyst Rating
7 Buy
1 Hold
0 Sell
Strong Buy
Current: 330.730
Low
63.24
Averages
313.46
High
390.00
Current: 330.730
Low
63.24
Averages
313.46
High
390.00
About TSM
Taiwan Semiconductor Manufacturing Co Ltd is a Taiwan-based integrated circuit foundry service provider. The Company is primarily engaged in integrated circuit manufacturing services. It offers advanced process technologies, specialised process solutions, advanced photomask and silicon stacking, and packaging-related technologies, while supporting a comprehensive design ecosystem. The Company's products serve diverse electronic sectors including artificial intelligence, high-performance computing, wired and wireless communications, automotive and industrial equipment, personal computing, information applications, consumer electronics, smart internet of things, and wearable devices.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
TSMC Reports Continued Growth in Q4 Earnings
- Significant Revenue Growth: TSMC's Q4 revenue reached $33.73 billion, reflecting a 25.5% year-over-year increase, demonstrating strong demand in the semiconductor market and reinforcing its leadership position.
- Strong Profit Margins: The company reported a profit margin of 48.3%, indicating its competitive advantage in high-end chip manufacturing, effectively controlling costs while achieving high returns.
- Advanced Process Technology: In 2023, over half of TSMC's revenue came from chips larger than 7nm, with significant increases in the production of 3nm and 5nm chips, as 3nm chips accounted for 28% of total shipments, showcasing ongoing investment in technological innovation.
- Robust Market Demand: With the rapid advancement of artificial intelligence technologies, TSMC is experiencing increasing customer demand, solidifying its status as the world's largest chip foundry and is expected to benefit from the growth in AI infrastructure investments.
See More
TSMC: The Winner in the AI Era
- Market Growth Potential: According to Fortune Business Insights, the AI market is projected to grow from $375.9 billion this year to $2.48 trillion by 2034, representing a compound annual growth rate of 26.6%, which presents significant opportunities for related companies.
- TSMC's Industry Position: As the world's largest semiconductor foundry, TSMC produced over 11,800 products across 288 different processes in 2024, demonstrating its unparalleled influence and customer base in the industry.
- Strong Financial Performance: TSMC reported fourth-quarter revenue of $33.73 billion, a 25.5% increase year-over-year, with a profit margin of 48.3%, indicating robust profitability in a rapidly growing market.
- Technological Advancements and Market Demand: TSMC derived over half of its revenue from chips larger than 7 nanometers in 2023, but has significantly increased production of 3nm and 5nm chips, which now account for 28% and 35% of total shipments respectively, showcasing its agility in adapting to technological advancements and market demand shifts.
See More
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- Alphabet Beats Earnings Estimates: Alphabet reported fourth-quarter revenue of $113.83 billion, surpassing the Street consensus estimate of $111.31 billion, with earnings per share of $2.82 exceeding expectations of $2.63, indicating strong performance in advertising and cloud services that may drive stock price increases.
- Amazon Delivery Milestone: Amazon announced it delivered over 13 billion items globally in 2025, with more than 8 billion items reaching U.S. Prime members the same or next day, a speed enhancement that will further strengthen its competitive position in the e-commerce market.
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Top Four AI Beneficiary Stocks to Buy Now
- Nvidia's Market Dominance: Nvidia leads the AI sector with its GPUs, crucial for training and running AI models, and is projected to achieve a 52% growth in fiscal 2027; despite concerns over an AI bubble, its robust long-term growth potential makes it an ideal investment choice.
- Broadcom's ASIC Innovation: Broadcom is challenging Nvidia's dominance by designing application-specific integrated circuits (ASICs), with AI semiconductor revenue expected to double year-over-year in Q1; while these chips won't fully replace GPUs, they offer superior performance for specific workloads, potentially capturing some of Nvidia's market share.
- TSMC's Key Role: As a leading chip foundry, TSMC's unmatched manufacturing capabilities position it well in the AI space, with projected growth rates of 31% and 22% for 2023 and 2024 respectively; as AI spending continues to rise, TSMC's stock performance is worth monitoring.
- Microsoft's Cloud Growth: Microsoft's Azure cloud platform saw a 39% year-over-year revenue increase in Q2 of fiscal 2026; although the market reacted negatively to some quarterly results, its $625 billion backlog indicates significant future growth potential, making the current stock price dip a buying opportunity.
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AMD and Nvidia's AI Market Outlook
- AMD Earnings Surge: AMD reported a 34% year-over-year revenue increase, exceeding $10 billion, with gross margin rising from 51% to 54%, indicating enhanced profitability; however, the stock fell 17% post-report, reflecting market caution regarding future growth.
- Strong Market Demand: CEO Lisa Su stated that AMD is entering a multi-year demand super cycle for high-performance and AI computing, expecting a compound annual growth rate exceeding 35% over the next three to five years, showcasing the company's strategic positioning in the AI sector.
- Nvidia Earnings Expectations: Nvidia is projected to report a 67% year-over-year revenue increase, surpassing $65 billion, on February 25; despite concerns about high valuations and potential AI bubbles, strong demand may drive performance beyond expectations.
- Investor Sentiment Fluctuations: Although Nvidia is likely to release positive earnings, investors may react negatively in the short term due to concerns about the sustainability of AI spending, similar to AMD's situation, potentially providing long-term investors with an opportunity to buy shares at reasonable prices.
See More
Semiconductor ETF Soars on AI Demand and Earnings Surge
- Strong January Performance: The iShares Semiconductor ETF (SOXX) surged 12% in January, reflecting robust market confidence in the semiconductor sector, particularly driven by TSMC's earnings and soaring memory prices, highlighting the ETF's significance in diversified investments.
- Memory Price Surge: According to Trendforce, traditional DRAM prices are expected to rise by 90% to 95% compared to the previous quarter, while NAND flash prices are projected to increase by 55% to 60%, indicating strong demand from AI infrastructure development, further boosting stocks like Micron.
- TSMC Capital Expenditure Outlook: Although TSMC is not part of the SOXX ETF, its forecast for capital spending of $52 billion to $56 billion in 2026, a 40% increase from 2025, underscores the long-term growth potential of the semiconductor industry, attracting investor interest.
- Market Volatility and Outlook: Despite a 4.6% decline in SOXX in February, capital expenditure forecasts from major cloud companies have exceeded market expectations, suggesting that AI infrastructure development will continue to grow strongly in 2026, positioning semiconductor stocks to benefit from this long-term trend.
See More
TSMC Reports Continued Growth in Q4 Earnings
- Significant Revenue Growth: TSMC's Q4 revenue reached $33.73 billion, reflecting a 25.5% year-over-year increase, demonstrating strong demand in the semiconductor market and reinforcing its leadership position.
- Strong Profit Margins: The company reported a profit margin of 48.3%, indicating its competitive advantage in high-end chip manufacturing, effectively controlling costs while achieving high returns.
- Advanced Process Technology: In 2023, over half of TSMC's revenue came from chips larger than 7nm, with significant increases in the production of 3nm and 5nm chips, as 3nm chips accounted for 28% of total shipments, showcasing ongoing investment in technological innovation.
- Robust Market Demand: With the rapid advancement of artificial intelligence technologies, TSMC is experiencing increasing customer demand, solidifying its status as the world's largest chip foundry and is expected to benefit from the growth in AI infrastructure investments.
See More
TSMC: The Winner in the AI Era
- Market Growth Potential: According to Fortune Business Insights, the AI market is projected to grow from $375.9 billion this year to $2.48 trillion by 2034, representing a compound annual growth rate of 26.6%, which presents significant opportunities for related companies.
- TSMC's Industry Position: As the world's largest semiconductor foundry, TSMC produced over 11,800 products across 288 different processes in 2024, demonstrating its unparalleled influence and customer base in the industry.
- Strong Financial Performance: TSMC reported fourth-quarter revenue of $33.73 billion, a 25.5% increase year-over-year, with a profit margin of 48.3%, indicating robust profitability in a rapidly growing market.
- Technological Advancements and Market Demand: TSMC derived over half of its revenue from chips larger than 7 nanometers in 2023, but has significantly increased production of 3nm and 5nm chips, which now account for 28% and 35% of total shipments respectively, showcasing its agility in adapting to technological advancements and market demand shifts.
See More
Federal Judge Orders Elon Musk to Testify in USAID Case
- Musk Ordered to Testify: A federal judge has ruled that Elon Musk must testify regarding his role in dismantling USAID, rejecting his legal team's attempt to avoid questioning, which could impact Musk's reputation and future business endeavors.
- Alphabet Beats Earnings Estimates: Alphabet reported fourth-quarter revenue of $113.83 billion, surpassing the Street consensus estimate of $111.31 billion, with earnings per share of $2.82 exceeding expectations of $2.63, indicating strong performance in advertising and cloud services that may drive stock price increases.
- Amazon Delivery Milestone: Amazon announced it delivered over 13 billion items globally in 2025, with more than 8 billion items reaching U.S. Prime members the same or next day, a speed enhancement that will further strengthen its competitive position in the e-commerce market.
- Tesla's New Model Launch: Tesla unveiled a new All-Wheel Drive variant of the Model Y in the U.S. and Puerto Rico following Elon Musk's announcement of discontinuing the Model S and X, which could attract more consumers and enhance market share.
See More
Top Four AI Beneficiary Stocks to Buy Now
- Nvidia's Market Dominance: Nvidia leads the AI sector with its GPUs, crucial for training and running AI models, and is projected to achieve a 52% growth in fiscal 2027; despite concerns over an AI bubble, its robust long-term growth potential makes it an ideal investment choice.
- Broadcom's ASIC Innovation: Broadcom is challenging Nvidia's dominance by designing application-specific integrated circuits (ASICs), with AI semiconductor revenue expected to double year-over-year in Q1; while these chips won't fully replace GPUs, they offer superior performance for specific workloads, potentially capturing some of Nvidia's market share.
- TSMC's Key Role: As a leading chip foundry, TSMC's unmatched manufacturing capabilities position it well in the AI space, with projected growth rates of 31% and 22% for 2023 and 2024 respectively; as AI spending continues to rise, TSMC's stock performance is worth monitoring.
- Microsoft's Cloud Growth: Microsoft's Azure cloud platform saw a 39% year-over-year revenue increase in Q2 of fiscal 2026; although the market reacted negatively to some quarterly results, its $625 billion backlog indicates significant future growth potential, making the current stock price dip a buying opportunity.
See More
AMD and Nvidia's AI Market Outlook
- AMD Earnings Surge: AMD reported a 34% year-over-year revenue increase, exceeding $10 billion, with gross margin rising from 51% to 54%, indicating enhanced profitability; however, the stock fell 17% post-report, reflecting market caution regarding future growth.
- Strong Market Demand: CEO Lisa Su stated that AMD is entering a multi-year demand super cycle for high-performance and AI computing, expecting a compound annual growth rate exceeding 35% over the next three to five years, showcasing the company's strategic positioning in the AI sector.
- Nvidia Earnings Expectations: Nvidia is projected to report a 67% year-over-year revenue increase, surpassing $65 billion, on February 25; despite concerns about high valuations and potential AI bubbles, strong demand may drive performance beyond expectations.
- Investor Sentiment Fluctuations: Although Nvidia is likely to release positive earnings, investors may react negatively in the short term due to concerns about the sustainability of AI spending, similar to AMD's situation, potentially providing long-term investors with an opportunity to buy shares at reasonable prices.
See More
Semiconductor ETF Soars on AI Demand and Earnings Surge
- Strong January Performance: The iShares Semiconductor ETF (SOXX) surged 12% in January, reflecting robust market confidence in the semiconductor sector, particularly driven by TSMC's earnings and soaring memory prices, highlighting the ETF's significance in diversified investments.
- Memory Price Surge: According to Trendforce, traditional DRAM prices are expected to rise by 90% to 95% compared to the previous quarter, while NAND flash prices are projected to increase by 55% to 60%, indicating strong demand from AI infrastructure development, further boosting stocks like Micron.
- TSMC Capital Expenditure Outlook: Although TSMC is not part of the SOXX ETF, its forecast for capital spending of $52 billion to $56 billion in 2026, a 40% increase from 2025, underscores the long-term growth potential of the semiconductor industry, attracting investor interest.
- Market Volatility and Outlook: Despite a 4.6% decline in SOXX in February, capital expenditure forecasts from major cloud companies have exceeded market expectations, suggesting that AI infrastructure development will continue to grow strongly in 2026, positioning semiconductor stocks to benefit from this long-term trend.
See More
