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Long termOWN
TSM
TSM
Taiwan Semiconductor Manufactur

Latest update

$410

Updated: Jul 16, 2026, 8:52 PM UTC

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Metrics

Taiwan Semiconductor Manufacturing Company Limited (TSM)

TSM is the world's leading semiconductor foundry, manufacturing a wide range of integrated circuits for high performance computing, smartphones, IoT, automotive, and digital consumer electronics. The company provides critical wafer fabrication processes, including advanced nodes, and operates globally. Recent results show strong growth in revenue, net income, and free cash flow, with robust profitability and a healthy balance sheet, though the stock's price has outpaced the business's growth.

Growth pace
How fast the underlying business is moving, quarter by quarter. Hover any tile for the plain-English meaning.

Revenue

The total dollars the company billed customers. When this number grows quarter after quarter, the business is finding more demand.

quarterly

Latest

$1.3T

Q2 2026

The most recent reported figure, in the company's own currency and reporting cadence.

QoQ

+12.0%

vs Q1 2026

How much this quarter grew compared to last quarter. Useful for spotting acceleration or slowdown in real time.

YoY

+36.0%

vs Q2 2025

How much this quarter grew compared to the same quarter one year ago. Strips out seasonality — a slow holiday quarter looks worse QoQ but normal YoY.

CAGR

insufficient history

The smooth yearly growth rate that gets you from the starting value to the current value. A 100% CAGR over 3 years means the business tripled, on average, each year.

Net income

What's left from revenue after paying every cost — employees, materials, taxes, interest. Sometimes called profit or 'the bottom line.'

quarterly

Latest

$706.6B

Q2 2026

The most recent reported figure, in the company's own currency and reporting cadence.

QoQ

+23.4%

vs Q1 2026

How much this quarter grew compared to last quarter. Useful for spotting acceleration or slowdown in real time.

YoY

+77.4%

vs Q2 2025

How much this quarter grew compared to the same quarter one year ago. Strips out seasonality — a slow holiday quarter looks worse QoQ but normal YoY.

CAGR

insufficient history

The smooth yearly growth rate that gets you from the starting value to the current value. A 100% CAGR over 3 years means the business tripled, on average, each year.

Free cash flow

The cash actually left in the bank after the company has paid for everything and reinvested in itself. Harder to fake than net income.

quarterly

Latest

$287.4B

Q2 2026

The most recent reported figure, in the company's own currency and reporting cadence.

QoQ

-17.3%

vs Q1 2026

How much this quarter grew compared to last quarter. Useful for spotting acceleration or slowdown in real time.

YoY

+43.8%

vs Q2 2025

How much this quarter grew compared to the same quarter one year ago. Strips out seasonality — a slow holiday quarter looks worse QoQ but normal YoY.

CAGR

insufficient history

The smooth yearly growth rate that gets you from the starting value to the current value. A 100% CAGR over 3 years means the business tripled, on average, each year.

Quarterly revenue, net income & free cash flow
Bars show what the company actually reported each quarter. The growth chart below turns these into the QoQ / YoY pace the rest of this page uses.
Annual growth rate (YoY)
Year-over-year change in full-year totals. Strips out quarterly noise and seasonality so the multi-year trend is visible — not just the last 12 months.
Compound annual growth (CAGR)
The smooth yearly growth rate across each window. The "start → end" line shows the dollar value at the beginning and end of the window.
Metric3 yr2 yr1 yr
Revenue
+36.1%
$933.8B$1.3T
Net income
+77.5%
$398.3B$706.6B
Free cash flow
+43.8%
$199.8B$287.4B
Valuation — P/E

P/E TTM

35.7×

Trailing twelve months. Today's price divided by the last year of actual earnings.

P/E NTM

19.8×

Next twelve months. Today's price divided by what analysts expect the company to earn over the coming year.

Balance sheet & valuation
The five numbers that decide whether the growth above is safe, sustainable, and reasonably priced. Descriptions on every tile — hover or scroll to read.

Profitability

Strong

Operating margin (and the wider return profile) tells you how efficiently each dollar of sales becomes profit. High and rising = pricing power; low or falling = the business is grinding.

Share count

Stable

Are the buybacks outrunning the stock-based comp? A shrinking share count means every existing share owns a bigger slice of future earnings.

Debt load

Light

Total debt against cash and earnings power (EBITDA). Light debt leaves room to invest and weather downturns; heavy debt shrinks the margin for error.

Debt service

Strong

Whether the cash the business generates easily covers its interest and loan payments. Strong here = no forced selling in a bad year.

Cash return at today's price

33.8%

Free cash flow divided by market cap — the cash yield you're getting for the price you pay. Above ~6% is rich, below ~3% is thin. P/E shown when the yield is too small to be useful.

What stands out
  • Sales and free cash flow are both growing significantly.
  • The stock price has recently run ahead of the underlying business growth.
  • The company maintains a light debt load, strong profitability, and efficient operations with high margins and returns.
  • Earnings growth (58.4%) significantly outpaces revenue growth (35.1%), indicating strong operational leverage.
  • Next earnings are imminent (July 16, 2026), introducing short-term volatility risk.

Thesis

Why this read

With earnings due immediately, it's best to wait for further clarity. The stock is currently below its daily moving average but still above its weekly average, indicating a short-term dip within a broader uptrend. While the fundamentals are highly compelling, the immediate event risk and recent short-term price softness suggest delaying an entry until after the earnings report provides more certainty.

Short-term thesis

Aligned80% conviction+15 ptsv1
TSM: The Indispensable Foundry in the AI Era

TSM continues to be a high-conviction holding, maintaining its pivotal role as the leading manufacturer of advanced semiconductors vital for AI and high-performance computing. Despite short-term market adjustments and imminent earnings volatility, the company's superior technology, robust financial health, and irreplaceable market position position it for sustained long-term growth.

Long-term exposure

Own

The business backdrop is strong enough for long-term exposure.

Entry window

Wait

TSM has seen a recent pullback, dropping below its daily moving average. While the underlying fundamentals remain very strong and the long-term trend is upward, the immediate proximity to earnings introduces significant uncertainty. It's prudent to wait for clarity post-earnings.

Risk check

Fragile

The downside can widen quickly if this setup goes wrong.

Alignment

Aligned

The weekly setup and the long-term case are pulling together.

What supports it

  • Sales and cash still support a long hold.
  • Price still looks reasonable against the business.
  • Balance sheet gives the thesis room to breathe.
  • Debt service still looks controlled against cash generation.

What limits it

  • This needs smaller size or more patience.
  • An earnings event is within the next week, so short-term gap risk is elevated.
  • Imminent earnings event represents short-term volatility risk.
  • Short-term price volatility, especially around earnings events.

Long-term thesis

The continued exponential growth of AI and high-performance computing will drive insatiable demand for the most advanced, power-efficient semiconductor chips, with TSM remaining the primary and often sole supplier.

90opportunity85% thesis conf
Crossing Chasm5y horizon

Bottleneck Role

TSM is the critical bottleneck as the world's leading, and often sole, manufacturer capable of producing the most advanced (sub-3nm) semiconductor nodes essential for next-generation AI and high-performance computing. This scarcity gives it significant pricing power and demand capture ability.

Consensus Blind Spot

The market may still be underestimating the sheer scale and long-term stickiness of demand for truly cutting-edge compute infrastructure, and the extent to which TSM's dominance in advanced nodes creates a virtually unassailable competitive moats for the next 5-10 years.

Demand Gap

The current supply of sub-3nm semiconductors cannot meet the accelerating demand from AI and HPC, creating a persistent bottleneck that TSM is uniquely positioned to fill.

Demand to Equity Scenarios

Base85% conf

Sustained AI Accelerator demand and HPC expansion

Demand

+22%

Earnings

+22%

Equity implication

+30%

Continued high utilization and robust pricing for advanced nodes, driving steady revenue and profit growth.

Bull65% conf

Hyper-growth in AI beyond current expectations, widespread adoption of edge AI, sovereign AI initiatives.

Demand

+35%

Earnings

+35%

Equity implication

+50%

Significantly higher ASPs for advanced nodes, accelerated capacity expansion, and deepening customer dependencies.

Bear75% conf

Slowdown in global tech spending, increased competition in advanced nodes, major geopolitical disruption.

Demand

-10%

Earnings

-10%

Equity implication

-15%

Decreased order volumes, potential price pressure, and underutilization of capacity.

Dependency Chain

  1. 1AI & HPC demand skyrockets
  2. 2Need for more powerful, efficient chips intensifies
  3. 3Demand for sub-3nm chip manufacturing surges
  4. 4TSM captures majority of this demand due to technological leadership
  5. 5High utilization and pricing power for TSM
  6. 6Strong earnings growth and equity repricing for TSM

Repricing Triggers

  • Strong earnings reports confirming continued AI-driven demand and robust gross margins.
  • Announcements of new strategic partnerships or significant capacity expansion for advanced nodes.
  • Successful ramp-up of N2/A14 process technologies.
  • Positive outlooks from key customers (e.g., NVIDIA, Apple) regarding their chip demand.
  • Clear governmental support for semiconductor manufacturing in key regions.

Must be true

  • TSM maintains its technological lead in process node advancements.
  • Global demand for AI and high-performance computing continues its accelerated growth trajectory.
  • Geopolitical risks, particularly related to Taiwan, remain manageable and do not severely disrupt operations.
  • Capital expenditures for new fabs and R&D continue to yield profitable returns.
  • Major customers do not significantly diversify away from TSM for leading-edge production.

Thesis broken if

  • Competitors (e.g., Samsung, Intel) show significant progress in catching up or surpassing TSM in advanced node technology.
  • Revenue growth significantly decelerates for several consecutive quarters, unrelated to macro cycles.
  • Gross margins compress due to increased competition or pricing pressure.
  • Significant onshoring of leading-edge chip manufacturing by major customers or governments that effectively bypasses TSM.
  • Major geopolitical events leading to prolonged operational disruptions.

History

What changed

Since the previous run · 1 month ago
Prior call was neutral

Signal

BUYBUY

Conviction

75%65%-10 pts

Long term

OwnOwn

Stock

$421.07$409.74-2.7%

Added since last run

9
  • Robust fundamental performance with high revenue and earnings growth.
  • Strong profitability with excellent operating and profit margins.
  • Solid balance sheet with a light debt load and strong debt service capabilities.
  • Positive revision trend in analyst estimates.
  • Dominant position as a critical bottleneck in advanced semiconductor manufacturing.
  • Imminent earnings event represents short-term volatility risk.
  • Stock price is correcting and currently below the daily moving average.
  • Valuation, while strong on Fwd P/E, has run ahead of the business historically.
  • Recent price action suggests a loss of short-term momentum.

No longer flagged

0

Nothing dropped this run

Model's reflection on the prior call

The prior call correctly identified that TSM was pulling back to support levels, which suggested a more favorable entry. However, the expectation of a continued longer-term upward trend immediately following the call was not met, as the stock experienced minimal price movement, indicating a neutral outcome for the very short term.

Analysis timeline
6 runs

Jul 16, 2026

Latest

Updated Jul 16, 2026, 8:52 PM UTC

WeeklyWAIT
Long termOWN
Confidence65% · Medium

Price at review

$410

TSM has seen a recent pullback, dropping below its daily moving average. While the underlying fundamentals remain very strong and the long-term trend is upward, the immediate proximity to earnings introduces significant uncertainty. It's prudent to wait for clarity post-earnings.

Jun 12, 2026

Updated Jun 12, 2026, 9:58 AM UTC

WeeklyBUY
Long termOWN
Confidence75% · High

Price at review

$421

TSM has pulled back to its weekly support levels, which aligns with strengthening fundamentals and expanding volume. This provides a potentially more favorable entry point compared to recent weeks, continuing the longer-term upward trend.

Jun 4, 2026

Updated Jun 4, 2026, 11:12 PM UTC

WeeklyWAIT
Long termWATCH
Confidence88% · High

Price at review

$445

Expect a period of sideways movement or a small dip toward support as the recent rally cools off.

May 28, 2026

Updated May 28, 2026, 9:43 PM UTC

WeeklyWAIT
Long termWATCH
Confidence80% · High

Price at review

$425

The recent price jump has left the stock a bit too far above its short-term average. It is better to wait for a small dip or for the average price to catch up before adding more.

May 19, 2026

Updated May 19, 2026, 8:39 AM UTC

WeeklyBUY
Long termWATCH
Confidence85% · High

Price at review

$396

The recent price drop has brought the stock back to a healthy starting point. It is now testing a key support level where buyers typically step back in during an uptrend.

May 9, 2026

Updated May 9, 2026, 9:28 AM UTC

WeeklyWAIT
Long termWATCH
Confidence85% · High

Price at review

$412

The stock is still holding its gains but remains stretched too far above its average historical price for a safe new entry. It is better to wait for a dip closer to recent support levels rather than buying at the top.