💥Will Taiwan Semiconductor (TSMC) Stock Keep Soaring Ahead of Earnings?

In partnership with

Hi Fellow Investors,

Taiwan Semiconductor Manufacturing (NYSE: TSM) is the quiet giant behind nearly every AI innovation powering the modern world.

Its chips are inside the servers driving ChatGPT, Apple iPhones, and Nvidia’s AI accelerators — and demand continues to surge faster than ever.

With third-quarter earnings set for October 16, investors re asking one burning question: Is it too late to buy TSMC now, or is this rally just getting started?

Key Points:

• TSMC controls 70% of the global foundry market — its highest share ever.

• Revenue surged 40% in the first half of 2025, fueled by demand for advanced AI chips.

• Even with a P/E of 33, its rapid growth may justify a premium valuation.

The Bull Case: A Foundry Powerhouse Driving the AI Boom

TSMC’s leadership in semiconductor manufacturing is unmatched.

According to TrendForce, it now commands over 70% of the global foundry market, far ahead of rivals like Samsung and Intel.

The company’s cutting-edge 2nm–5nm process chips are essential for powering artificial intelligence, cloud data centers, and next-generation smartphones.

Revenue jumped 40% year over year to $56 billion in the first half of 2025 — and management expects up to $33 billion for Q3, a 38% increase.

TSMC has beaten analyst revenue estimates for four consecutive quarters, and if it delivers again, its growth could continue to accelerate into year-end.

Areas of Concern: Valuation and Geopolitical Tensions

Despite its stellar performance, investors can’t ignore the risks.

TSMC spends heavily to meet soaring demand — nearly $20 billion in CapEx during the first half of 2025, including a $165 billion investment in six new Arizona fabs.

That expansion is costly, and while it strengthens global diversification, profitability could tighten in the short term.

The bigger concern, however, remains geopolitical risk.

Because TSMC’s core operations are based in Taiwan, its proximity to China poses long-term uncertainty. Warren Buffett’s Berkshire Hathaway even exited its TSMC position over this reason.

While most experts agree China cannot afford to disrupt global chip supply, the mere perception of risk often weighs on valuation.

Valuation: Is TSMC Still Worth Buying at Record Highs?

At a price-to-earnings ratio of 33, TSMC trades above its five-year average of 25 — but it’s still cheaper than Nvidia and Apple, two of its biggest clients.

Given its 40% revenue growth, TSMC’s current valuation doesn’t appear excessive for long-term investors.

However, with shares at all-time highs and near the upper end of its historical P/E range, short-term pullbacks are possible if earnings disappoint.

Investors seeking stability might consider a staggered entry — investing half now and half after earnings — a classic dollar-cost-averaging strategy that reduces timing risk.

Strengths

Dominant market share: TSMC’s 70% global foundry control gives it unrivaled pricing power and client stickiness — a position few tech companies ever achieve.

Cutting-edge chip technology: Its leadership in 2nm–5nm processes cements its role as the manufacturing backbone of the AI revolution.

Revenue momentum: With 40% year-over-year growth and a four-quarter streak of beating expectations, TSMC continues to outperform every forecast.

Weaknesses

Rising production costs: Building advanced foundries and expanding globally requires massive CapEx that could pressure margins in the near term.

Geopolitical exposure: Heavy reliance on Taiwan-based manufacturing leaves the company vulnerable to geopolitical shocks and investor uncertainty.

Valuation stretch: Trading at a P/E above its historical average, TSMC’s premium pricing leaves less room for error if growth slows.

Potential

AI-driven demand explosion: The boom in AI infrastructure and cloud computing could fuel years of exponential chip demand, with TSMC at the center of it all.

Global diversification: New Arizona plants could ease geopolitical fears, attract U.S. partnerships, and boost long-term investor confidence.

Sustainable growth runway: As the only foundry capable of mass-producing next-gen chips, TSMC’s future growth trajectory remains powerful and resilient.

Conclusion

While uncertainty always surrounds earnings season, one thing is clear: TSMC remains indispensable to the global AI ecosystem.

Its market dominance, breakthrough chip technology, and explosive growth make it one of the few semiconductor stocks positioned for enduring success.

Investors may debate timing, but long-term holders know the truth — time in TSMC beats timing TSMC.

^{Disclaimer: The content provided on this blog is for educational and informational purposes only and is not intended as financial, investment, tax, or legal advice. Investing in the stock market involves risks, including the loss of principal. The views, thoughts, and opinions expressed in this blog are solely those of the author and do not reflect the views of any company, organization, or other group. Readers are encouraged to perform their own research and due diligence before making any financial decisions and actions based on the content. Neither the author nor the publisher is liable for any losses or damages arising from the use of the advice or information contained herein.}