TSM AI Stock Analysis – Buy, Hold, or Avoid?
Taiwan Semiconductor Manufacturing Company Limited (TSM)
TSMC is a global semiconductor leader with accelerating growth, best-in-class margins, and strong technical and sentiment tailwinds, though it trades at a premium valuation. While geopolitical and industry risks remain, the company’s dominant market position and robust financials support a positive outlook across all timeframes. Investors should monitor valuation and macro risks, but the risk/reward profile is compelling for both traders and long-term investors.
Fundamentals
TSMC demonstrates robust financial health with leading profit margins, accelerating earnings, and consistent revenue expansion, underpinned by its dominant foundry model and exposure to secular semiconductor demand. Recent quarters show strong growth momentum and positive earnings surprises, enhancing its investment profile despite a premium valuation. The company's global leadership and supply chain strategic importance position it favorably for future growth while maintaining high profitability.
Financial Highlights
- Revenue
- Net Income
- Net Margin (%)
Revenue
35.13% YoY
Q1 2026
Net Income
58.33% YoY
Q1 2026
Net Margin
Q1 2026
Growth Metrics
Revenue Growth YoY
Latest Quarter: Q1 2026
Net Income Growth YoY
Latest Quarter: Q1 2026
Revenue Per Share Growth YoY
Latest Quarter: Q1 2026
EPS Growth YoY
Latest Quarter: Q1 2026
Book Value Per Share Growth YoY
Latest Quarter: Q1 2026
| Q1 2026 | Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | |
|---|---|---|---|---|---|---|---|---|
| Revenue | 1.1T | 1.1T | 989.9B | 933.8B | 839.3B | 868.5B | 759.7B | 673.5B |
| Revenue Growth YoY | +35.13% | +21.59% | +30.31% | +38.65% | +41.61% | +38.84% | +38.95% | +40.07% |
| Net Income | 572.5B | 510.5B | 452.3B | 398.3B | 361.6B | 359.8B | 325.3B | 247.8B |
| Net Income Growth YoY | +58.33% | +41.89% | +39.06% | +60.69% | +60.35% | +50.72% | +54.15% | +36.33% |
| EPS | $110.40 | $98.40 | $87.20 | $76.80 | $69.70 | $69.40 | $62.75 | $47.80 |
| EPS Growth YoY | +58.39% | +41.79% | +38.96% | +60.67% | +60.23% | +50.71% | +54.18% | +36.38% |
Profitability Metrics
Gross Margin
TTM
Operating Margin
TTM
Net Margin
TTM
Return on Equity
TTM
Return on Assets
TTM
| Q1 2026 | Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | |
|---|---|---|---|---|---|---|---|---|
| Gross Margin | 66.25% | 62.33% | 59.45% | 58.62% | 58.79% | 59.00% | 57.83% | 53.17% |
| Operating Margin | 57.96% | 53.90% | 50.58% | 49.63% | 48.51% | 49.02% | 47.49% | 42.55% |
| Net Margin | 50.48% | 48.35% | 45.69% | 42.65% | 43.08% | 41.43% | 42.81% | 36.80% |
| Return on Equity (ROE) | 9.72% | 9.33% | 9.05% | 8.69% | 7.92% | 8.83% | 8.15% | 6.54% |
| Return on Assets (ROA) | 6.61% | 6.40% | 6.17% | 5.70% | 5.09% | 5.62% | 5.29% | 4.16% |
Technical Analysis
TSM is firmly in a strong uptrend characterized by a bullish golden cross and trading near its 52-week high. Momentum remains positive with supportive MACD signals and RSI in a neutral zone, although slight overbought conditions suggest monitoring for possible short-term pullbacks. Key support levels near $360-$361 provide a solid base, while resistance is active around $411-$414, with upside potential towards $420 and beyond in the near term.
No extreme reading
Price in uptrend
Trend developing
50 above 200 - bullish
Key Technical Values
Price with Moving Averages
50-day, 150-day and 200-day simple moving averages
Relative Strength Index
Momentum oscillator measuring speed and magnitude of price changes
RSI (14)
Earnings
TSMC demonstrates robust financial health with leading profit margins, accelerating earnings, and consistent revenue expansion, underpinned by its dominant foundry model and exposure to secular semiconductor demand. Recent quarters show strong growth momentum and positive earnings surprises, enhancing its investment profile despite a premium valuation. The company's global leadership and supply chain strategic importance position it favorably for future growth while maintaining high profitability.
Latest Earnings
Q1 2026 Earnings (Mar 31, 2026)
Earnings Per Share (EPS)
Actual
$3.49
Estimated
$3.31
Surprise
+$0.18
Surprise %
+5.44%
Revenue
Actual
$35.98B
Estimated
$35.35B
Surprise
+$627.66M
Surprise %
+1.78%
Historical Earnings
| Q1 2026 | Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | |
|---|---|---|---|---|---|---|---|---|
| Earnings Per Share | ||||||||
| EPS (Actual) | $3.49 | $3.09 | $2.85 | $2.61 | $2.14 | $2.19 | $1.95 | $1.47 |
| EPS (Estimated) | $3.31 | $2.90 | $2.63 | $2.38 | $2.07 | $2.20 | $1.79 | $1.41 |
| EPS Surprise | +$0.18 | +$0.19 | +$0.22 | +$0.23 | +$0.07 | -$0.01 | +$0.16 | +$0.06 |
| % Diff | +5.4% | +6.6% | +8.4% | +9.7% | +3.4% | -0.5% | +8.9% | +4.3% |
| Revenue | ||||||||
| Revenue (Actual) | $35.98B | $33.14B | $32.36B | $31.75B | $25.8B | $26.38B | $23.6B | $20.66B |
| Revenue (Estimated) | $35.35B | $33.01B | $32.07B | $30.21B | $25.46B | $26.24B | $23.31B | $20.33B |
| Revenue Surprise | +$627.66M | +$130.27M | +$286.73M | +$1.54B | +$343.82M | +$137.67M | +$293M | +$332.06M |
| % Diff | +1.8% | +0.4% | +0.9% | +5.1% | +1.4% | +0.5% | +1.3% | +1.6% |
Valuation
TSM currently trades at premium valuation multiples reflecting strong growth and market leadership in the semiconductor sector. Despite elevated multiples, the firm's robust financial health, superior margins, and advanced technology position support a justified premium. Analyst consensus suggests modest upside potential, with continued demand in AI and HPC driving growth prospects.
Valuation Metrics
Price to Earnings
TTM
Price to Sales
TTM
Price to Book
TTM
Enterprise Value to EBITDA
TTM
Enterprise Value to Revenue
TTM
| Q1 2026 | Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | |
|---|---|---|---|---|---|---|---|---|
| Price to Earnings | 19.93 | 19.87 | 18.71 | 17.25 | 16.31 | 18.60 | 19.07 | 25.32 |
| Price to Sales | 40.24 | 38.43 | 34.19 | 29.43 | 28.11 | 32.10 | 32.66 | 37.27 |
| Price to Book | 7.75 | 7.42 | 6.77 | 6.00 | 5.17 | 6.57 | 6.22 | 6.62 |
| Enterprise Value to EBITDA | 53.02 | 51.12 | 46.97 | 39.63 | 36.58 | 44.95 | 43.15 | 51.31 |
| Enterprise Value to Revenue | 38.46 | 36.80 | 32.65 | 27.88 | 26.47 | 30.86 | 31.53 | 36.12 |
Sentiment & Analyst Ratings
Taiwan Semiconductor Manufacturing Company (TSM) currently enjoys a broadly positive market sentiment, primarily driven by strong demand in the AI sector, record-breaking financial results, and bullish analyst ratings. While valuation concerns exist due to its premium pricing, optimistic revenue and profit growth, combined with significant insider buying, support a constructive outlook among investors and analysts.
Analyst Recommendations
Risk Assessment
TSMC exhibits a robust financial position supported by strong liquidity and moderate leverage, positioning it well to capitalize on the growing AI-driven semiconductor demand. However, the company faces industry risks including capacity constraints, geopolitical tensions, rising costs, and intensifying competition that could pressure margins and growth sustainability.
Liquidity & Solvency
Current Ratio
Latest Quarter: Q1 2026
Quick Ratio
Latest Quarter: Q1 2026
Debt-to-Equity
Latest Quarter: Q1 2026
Debt-to-Assets
Latest Quarter: Q1 2026
| Q1 2026 | Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | |
|---|---|---|---|---|---|---|---|---|
| Liquidity Metrics | ||||||||
| Current Ratio | 2.49 | 2.62 | 2.69 | 2.37 | 2.39 | 2.36 | 2.57 | 2.47 |
| Quick Ratio | 2.31 | 2.32 | 2.47 | 2.15 | 2.18 | 2.14 | 2.30 | 2.21 |
| Solvency Metrics | ||||||||
| Debt-to-Equity | 0.17 | 0.20 | 0.19 | 0.20 | 0.22 | 0.25 | 0.26 | 0.27 |
| Debt-to-Assets | 0.12 | 0.13 | 0.13 | 0.13 | 0.14 | 0.16 | 0.17 | 0.17 |
Liquidity Assessment
Current Ratio: 2.49(Strong)
Quick Ratio: 2.31(Strong)
The company has strong liquidity with sufficient short-term assets to cover liabilities.
Solvency Assessment
Debt-to-Equity: 0.17(Low)
Debt-to-Assets: 0.12(Low)
The company has conservative debt levels, indicating low financial risk and strong long-term solvency.
Frequently Asked Questions about TSM
AI Answers: Common Questions About TSM
Get AI-powered answers to the questions investors ask most about Taiwan Semiconductor Manufacturing Company Limited
TSMC is a strong buy right now for most investors: it trades at $411.68, near its 52-week high ($420), with a P/E of 35.49 reflecting high growth and sector leadership. Despite the premium, accelerating earnings (Q1 2026 EPS up 60% YoY) and robust demand in AI/HPC justify the valuation.
There is no fundamental or technical reason to sell TSMC at this time unless you are highly risk-averse or overexposed; the uptrend remains intact, earnings momentum is strong, and sentiment is positive. Consider trimming only if you need to rebalance or if the stock breaks below key support ($360).
The biggest risks are geopolitical (Taiwan/US-China tensions), capacity constraints, and rising competition; Sentinel notes a debt/equity ratio of 0.17 and high liquidity (current ratio >2.4), so financial risk is low. Monitor for margin pressure if costs rise or demand slows.
Technical resistance is at $411-$414, with near-term upside targets at $420 and medium-term potential toward $424-$438 if momentum continues. Analyst consensus suggests modest further upside, with strong support at $360-$361.
TSMC is fairly valued at a premium: P/E is 35.49, EV/EBITDA and P/S are well above sector averages, but this is justified by 33%+ revenue growth and 66%+ gross margins. The premium reflects its dominant position and growth outlook.
Fundamentals are exceptionally strong: gross margin is 66.2%, net margin over 50%, ROE above 30%, and revenue/EPS growth accelerating (Q1 2026 EPS up 60% YoY). The balance sheet is robust with low leverage and high liquidity.
Technical analysis is bullish: the stock is in a strong uptrend, above all major SMAs, with a golden cross and RSI at 64 (neutral to slightly overbought). A breakout above $414 could see a move to $420-$438; support is strong at $360-$361.
Key catalysts include continued AI chip demand, upcoming earnings (with a track record of beats), new advanced node launches (2nm/3nm), and macro events affecting semiconductor supply chains or US-China relations.
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