As Taiwan Semi Joins the Trillion-Dollar Club, Should You Buy, Sell, or Hold TSM Stock?
With every major AI player, from Apple (AAPL), to Nvidia (NVDA), relying on TSM's advanced technologies, and the world holding its breath as the semiconductor supply chain evolves, investors find themselves at a remarkable crossroads. Can TSM keep up this blistering pace, and should you bet on (or against) the chip giant now that it towers among the world's most valuable firms? Let's dive into TSM.
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TSM's Q2 Financial Report
Taiwan Semiconductor Manufacturing (TSM), the world's leading contract chipmaker, commands a market capitalization north of $1.24 trillion, cementing its status as the backbone of global tech for giants like Apple and Nvidia.
TSM's share price is up 19% year-to-date and 39% over the last 52 weeks.
TSM trades at a forward price-earnings multiple of 24.8x, compared to a sector median of 24.4x. This shows that TSM is likely fairly valued.
On July 17, 2025, TSM reported blockbuster second-quarter numbers. Consolidated revenue reached $30 billion, surging 44.4% year-over-year and 17.8% sequentially. Net income was $12.8 billion, up 42.6% year over year, and dilted earnings per share came in at $0.49 and $2.47 per ADR.
Production at the cutting edge remained the company's calling card: 3-nanometer technology deliveries accounted for 24% of wafer revenue, 5-nanometer 36%, and 7-nanometer 14%; advanced nodes (7-nm and better) captured an impressive 74% of total wafer sales.
TSM's Growth Engines
The company recently unveiled a $100 billion boost to its U.S. investment, expanding its American footprint to an extraordinary $165 billion overall. Rather than a routine capital allocation, this commitment will roll out three new state-of-the-art fabrication plants, two advanced packaging facilities, and a major R&D center.
Together, these facilities are primed to reinforce the company's global leadership and ensure that heavyweight clients like Apple, Nvidia, Advanced Micro Devices (AMD), Broadcom (AVGO), and Qualcomm (QCOM) get a steady flow of the most advanced chips on the planet.
This aggressive expansion is rooted in TSM's need to keep pace with persistent and intensifying customer demand. With orders surging, TSM is gearing up to open nine new fabrication facilities in 2025 alone, a testament to its unrivaled agility and capacity to scale.
Partnerships continue to be a pillar of TSM's dominance, as TSM continues to secure and renew major manufacturing partnerships with global technology leaders. Significantly, both Nvidia and AMD (AMD) have selected TSM's cutting-edge HBM3E memory solution for their latest GPUs, the Blackwell and MI355X series, respectively, reinforcing TSM's dominance in critical high-performance and AI workloads.
What the Experts See in TSM
For the current quarter ending September 2025, analysts are forecasting average earnings per share of $2.53, up from $1.94 in the same period last year. Zooming out to the full fiscal year, consensus pegs TSM's average EPS at $9.68, a significant leap from the $7.04 reported last year. That translates to estimated year-over-year growth rates of 30.4% for the quarter and a striking 37.5% for the year.
TSM's outlook for the third quarter of 2025 calls for revenue between $31.8 billion and $33 billion, supported by a gross profit margin in the 55.5% to 57.5% range and operating margins between 45.5% and 47.5%. That's a testament not just to the company's powerful pricing and scale advantages, but also to its ability to navigate large-scale capital investments and supply chain complexities without eroding profitability.
The 11 analysts surveyed rate TSM as a consensus 'Strong Buy,' reflecting faith in both the momentum of its core business and its leadership in AI and advanced chip production. Their average price target stands at $257.88, representing 10% upside from current levels.
Conclusion
TSM is still the backbone of the global chip industry, and its growth story shows no signs of stopping. With profits soaring, strong analyst support, and expansion plans firing on all cylinders, holding or even adding a little more here looks smart, unless you expect a major tech rout. Personally, I think shares have room to edge higher over the next year as AI demand keeps fueling the fire.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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