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Leading edge offerings, growing global capacity, expanding market share, and rich pricing power underscore the resilient demand for TSM's foundry capabilities. Despite macro headwinds and AI credit risks, the strong balance sheet and disciplined capex position it for multi-year, profitable growth prospects. Current consolidation and oversold technicals provide an attractive entry point at P/E of 23.57x, with TSM offering a rich upside potential to my LTPT of $702.80.

State Street SPDR Portfolio Developed World ex-US ETF (SPDW -0.30%) targets established international economies with extremely low fees, while iShares Core MSCI Emerging Markets ETF (IEMG +0.40%) provides exposure to higher-growth developing nations.

Investors seeking international diversification must often decide between established developed markets and faster-growing emerging economies. While both the State Street and iShares funds provide broad exposure outside the United States, they target different geographic regions and risk profiles. This comparison examines how their costs, yields, and underlying holdings differ.

Snapshot (cost & size)MetricIEMGSPDWIssueriSharesSPDRShare price$78.09 (as of 2026-10-15)$49.52 (as of 2026-10-15)Expense ratio0.09%0.03%1-yr return (as of Oct. 15, 2026)20.3%18.5%Dividend yield2.4%3.1%Beta0.760.86AUM$154.5 billion$40.8 billionBeta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The State Street fund is significantly more affordable, with an expense ratio of 0.03% that undercuts the 0.09% fee charged by the iShares ETF. It also offers a more significant income stream, with a trailing yield 0.84 percentage points higher.

Performance & risk comparisonMetricIEMGSPDWMax drawdown (5 yr)(32.7%)(29.8%)Growth of $1,000 over 5 years (total return)$1,417$1,557What's insideState Street SPDR Portfolio Developed World ex-US ETF focuses on major economies like Japan, the United Kingdom, and Canada. Its portfolio is concentrated in financial services (25%), industrials (18%), and technology (15%). The fund holds 2,417 stocks, and its largest positions include Samsung Electronics (KOSE:A005930)) at 2.32%, ASML Holding (ASML +0.72%) at 1.95%, and SK Hynix (SKHY +4.05%) at 1.72%. It was launched in 2007. State Street SPDR Portfolio Developed World ex-US ETF has paid $1.52 per share over the trailing 12 months, which on its recent ~$49.52 share price works out to a 3.1% yield.

The iShares Core MSCI Emerging Markets ETF provides a different flavor of international exposure by tracking 2,801 companies in developing nations like China, India, and Brazil. It leans significantly more into technology at 42%, followed by financial services at 21% and consumer cyclicals at 8%. Top holdings include Taiwan Semiconductor Manufacturing (TSM +1.49%) at 13.99%, Samsung Electronics at 5.94%, and SK Hynix at 4.06%. It was launched in 2012. iShares Core MSCI Emerging Markets ETF has paid $1.80 per share over the trailing 12 months, which on its recent ~$78.09 share price works out to a 2.2% yield.

For more guidance on ETF investing, check out the full guide at this link.

Which looks like the better buyBoth funds offer compelling opportunities outside the U.S., but for long-term investors, the State Street SPDR Portfolio Developed World ex-US ETF looks like the better buy.

The iShares Core MSCI Emerging Markets ETF is certainly attractive given its substantial exposure to the semiconductor industry. Companies like Taiwan Semiconductor Manufacturing, Samsung Electronics, and SK Hynix are central to the global AI infrastructure buildout, providing investors with exposure to one of the most significant growth trends in today's market.

However, that opportunity comes with additional risks. Emerging markets remain sensitive to currency fluctuations, geopolitical uncertainty, and shifts in global investor sentiment. With roughly 42% of its portfolio concentrated in technology, the fund is also heavily dependent on the industry's continued strength.

Meanwhile, the State Street fund offers a considerably lower expense ratio of just 0.03%, a higher dividend yield, and exposure to established international economies. It also maintains holdings in semiconductor leaders, allowing investors to participate in the AI boom without concentrating so heavily on technology.

For investors looking to build a diversified international portfolio, State Street's ETF looks better positioned. The iShares fund may deliver greater upside, but the State Street SPDR Portfolio Developed World ex-US ETF offers a more balanced combination of income, cost efficiency, and long-term growth potential.

Advanced-chip foundry TSMC (TSM) reported its sixth consecutive record quarterly profit, with U.S.-listed shares up 1.89% to $420.14 at 10:50 a.m. ET Friday. AI

TSMC (TSM +1.16%), the world's top contract chipmaker, posted its third-quarter earnings on Oct. 15. Its revenue and net profit surged 50% and 69%, respectively, and set new record highs.

That also marked TSMC's sixth consecutive quarter of record profits. However, TSMC's stock slipped after that impressive report -- and it's still down 7% over the past month. Let's see why TSMC's stock didn't soar higher, and if it's worth buying in this choppy market.

Image source: Getty Images.

How fast is TSMC growing?
TSMC manufactures the world's most advanced chips for the largest fabless chipmakers, including Nvidia (NVDA -0.11%), AMD, and Broadcom. Most of its recent growth has been driven by the AI market's breakneck expansion.

TSM Taiwan Semiconductor Manufacturing$417.15+$4.80 (+1.16%)

NYSE · As of 2:00 PM ET 10/23/26

In the third quarter, TSMC generated 68% of its revenue from producing high-performance computing (HPC) chips for AI-driven customers such as Nvidia. Its HPC revenue also rose 22% sequentially, marking a significant acceleration from its previous quarters.

Metric

Q3 2025

Q4 2025

Q1 2026

Q2 2026

Q3 2026

Percentage of Revenue from HPC

57%

55%

61%

66%

68%

HPC Revenue Growth (QoQ)

0%

4%

20%

20%

22%

Data source: TSMC. QoQ = Quarter-over-quarter.

TSMC also generated a third of its revenue from its 3nm node, which produces Nvidia's newest Vera Rubin computing platform. That expansion of that high-end node indicates that TSMC is maintaining its lead in the production of the world's smallest and densest chips. It also generated 8% of its revenue from its newest 2nm node.

Percentage of Revenue by Node

Q3 2025

Q4 2025

Q1 2026

Q2 2026

Q3 2026

3nm

23%

24%

25%

30%

33%

5nm

37%

36%

36%

33%

28%

7nm

14%

14%

13%

11%

10%

Data source: TSMC.

For the full year, TSMC expects its revenue to rise 44% in USD terms. That's up slightly from its prior outlook for at least 40% growth, and marks its third top-line guidance boost in 2026.

It expects that acceleration to be driven by the increased production of AI chips and the expansion of its 2nm node. It didn't raise its full-year capex target of $60 billion to $64 billion.

Why did TSMC's stock pull back?
TSMC's headline numbers were impressive, but a few issues weighed down the stock. First, its gross margin of 66.4% -- which matched its own guidance of 65%-67% and expanded from its gross margin of 59.5% a year earlier -- dipped sequentially from 67.7% in the second quarter.

That sequential contraction wasn't surprising, since TSMC ramped up its 2nm production and expanded its overseas fabs during the quarter. But with its capex already set to hit record levels this year (up 47%-56% from 2025), that dip likely rattled some investors.

Another concern is the AI market's potential slowdown. Even though there is still plenty of pent-up demand for the latest AI chips, rising interest rates and other macro headwinds could throttle the market's near-term growth. If hyperscalers like Amazon and Microsoft rein in their AI spending, TSMC's HPC growth could cool off.

Lastly, TSMC's stock had risen 39% year-to-date before its third-quarter report. Therefore, a lot of optimism was already baked into its stock -- which limited its near-term growth potential.

Should long-term investors be worried?
TSMC will remain a linchpin of the semiconductor market for the foreseeable future, and it's still a balanced way to invest in the AI boom without putting too much faith in a single chipmaker. From 2025 to 2028, analysts expect its revenue and EPS to grow at CAGRs of 36% and 42%, respectively, as the AI chip market expands.

Those are incredible growth rates for a stock that trades at 16 times next year's earnings. So if you plan to hold TSMC for a few years instead of a few quarters, it's still a great time to accumulate this reliable semiconductor stock.

Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Broadcom, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Intel can now build a transistor that rivals anyone in the world, yet its foundry business is bleeding billions while TSMC signs hundreds of outside customers. The two latest earnings reports expose a gap that transistor specs alone cannot close.

There are few companies on the market more impressive than Taiwan Semiconductor Manufacturing (TSM -4.93%) and ASML Holding (ASML -7.07%). Both are essentially monopolies for different reasons, but each is an incredible business and has rewarded shareholders with strong stock performance.

However, these two aren't the same from an investment standpoint. One is far safer, and it all boils down to how much success is priced into the stock. I think Taiwan Semiconductor is the far safer bet for multiple reasons, making it the better investment right now. Here's why.

Image source: Getty Images.

How are these two monopolies?
There are different types of monopolies, and not all of them are viewed the same way. When it comes to monopolies, ASML is about as good as it gets. It is the only company in the world with the technology to make extreme ultraviolet (EUV) lithography machines. These machines are about as big as a school bus and cost hundreds of millions of dollars.

EUV machines are used by chip fabricators, such as Taiwan Semiconductor, to lay down tiny electrical traces on chips. These traces are microscopic and have spacing as little as 2 nanometers (nm) apart. For reference, a human hair is 80,000 to 100,000 nanometers across. With ASML being the sole supplier of a critical machine in the chip manufacturing world, it has a very solid technological monopoly that will be nearly impossible to break.

$1,558.18-$118.51 (-7.07%)

NASDAQ · As of 3:47 PM ET 10/22/26

Taiwan Semiconductor's monopoly status is a bit more shaky but still impressive. There are several other chip foundries out there, and many have the same advanced technology available to make the highest-performance chips possible. However, nobody has the scale that TSMC does.

During Q2, Taiwan Semiconductor accounted for about 72.5% of revenue in the chip fabrication industry. That's a major size advantage that holds its clients captive, because they couldn't move all of their work to another foundry if they tried, since its competitors wouldn't have the necessary scale.

While this advantage could be challenged over time by a rising competitor, there's nobody even close right now. TSMC has great relationships with its clientele, so I doubt its grip on this industry will be broken anytime over the next decade.

TSM Taiwan Semiconductor Manufacturing$410.62-$21.28 (-4.93%)

NYSE · As of 3:48 PM ET 10/22/26

While I would say ASML's monopoly status is stronger than TSMC's, I can't say the same about their businesses or stocks.

ASML is on shakier ground than TSMC
ASML's business model requires its clients to expand production capacity to sell more machines. While it makes revenue servicing these machines every year, it's not nearly as much as outright selling them.

Business is good for ASML right now because every chip manufacturer (including TSMC) is racing to expand production capacity to meet demand from the AI build-out. However, once the AI build-out is complete, there may not be a need to expand chip production capacity for some time, which could harm ASML's business.

At the same time, while TSMC may not be growing, there could be other technologies that require a substantial number of chips, such as humanoid robots, physical AI, or self-driving cars. That would allow Taiwan Semiconductor to maintain the business size it has achieved, making it a better long-term investment. However, none of this is reflected in the stock's valuation.

TSM PE Ratio (Forward) data by YCharts

ASML trades at a sizable premium to Taiwan Semiconductor when using 2026 earnings estimates. That same trend persists when 2027 earnings are used.

TSM PE Ratio (Forward 1y) data by YCharts

So, ASML is a more expensive stock but with a less certain long-term demand outlook. While monopoly stocks may be safer, I'm more concerned about how they will fare when the current demand wave wraps up. As a result, I think Taiwan Semiconductor is a far safer investment option.

Cantor Fitzgerald Investment Advisors L.P. acquired a new position in shares of Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM – Free Report) during the 3rd quarter, according to the company in its most recent disclosure with the Securities and Exchange Commission. The firm acquired 13,436 shares of the semiconductor company’s stock, valued at approximately $6,129,000.

Several other hedge funds have also added to or reduced their stakes in the business. Tiger Global Management LLC grew its stake in Taiwan Semiconductor Manufacturing by 49.4% in the first quarter. Tiger Global Management LLC now owns 5,565,074 shares of the semiconductor company’s stock valued at $1,880,717,000 after acquiring an additional 1,839,600 shares during the period. Sei Investments Co. increased its holdings in shares of Taiwan Semiconductor Manufacturing by 11.8% in the first quarter. Sei Investments Co. now owns 2,591,510 shares of the semiconductor company’s stock worth $875,802,000 after acquiring an additional 274,389 shares in the last quarter. Bessemer Group Inc. raised its position in shares of Taiwan Semiconductor Manufacturing by 7.9% during the first quarter. Bessemer Group Inc. now owns 1,781,764 shares of the semiconductor company’s stock worth $602,147,000 after purchasing an additional 130,602 shares during the period. Assenagon Asset Management S.A. raised its position in shares of Taiwan Semiconductor Manufacturing by 67.2% during the third quarter. Assenagon Asset Management S.A. now owns 1,717,515 shares of the semiconductor company’s stock worth $783,513,000 after purchasing an additional 690,523 shares during the period. Finally, AMF Tjanstepension AB raised its position in shares of Taiwan Semiconductor Manufacturing by 6.4% during the first quarter. AMF Tjanstepension AB now owns 1,632,738 shares of the semiconductor company’s stock worth $551,784,000 after purchasing an additional 98,123 shares during the period. Institutional investors and hedge funds own 16.51% of the company’s stock.

Analysts Set New Price Targets Several equities analysts have recently weighed in on TSM shares. TD Cowen lifted their price objective on Taiwan Semiconductor Manufacturing from $400.00 to $440.00 and gave the company a “hold” rating in a report on Friday, July 17th. Susquehanna increased their target price on Taiwan Semiconductor Manufacturing from $575.00 to $600.00 and gave the stock a “positive” rating in a research note on Thursday, July 16th. DA Davidson restated a “buy” rating and set a $500.00 target price on shares of Taiwan Semiconductor Manufacturing in a report on Friday, October 16th. Zacks Research upgraded shares of Taiwan Semiconductor Manufacturing from a “hold” rating to a “strong-buy” rating in a report on Thursday, July 16th. Finally, Stifel Nicolaus started coverage on shares of Taiwan Semiconductor Manufacturing in a research note on Tuesday, September 1st. They issued a “buy” rating and a $515.00 price target on the stock. Three equities research analysts have rated the stock with a Strong Buy rating, eleven have issued a Buy rating and two have assigned a Hold rating to the stock. Based on data from MarketBeat.com, the company presently has a consensus rating of “Buy” and a consensus price target of $528.78.

Check Out Our Latest Report on Taiwan Semiconductor Manufacturing Insider Activity In other news, VP Bor-Zen Tien acquired 1,000 shares of the firm’s stock in a transaction that occurred on Monday, August 3rd. The stock was acquired at an average cost of $73.06 per share, for a total transaction of $73,060.00. Following the completion of the acquisition, the vice president owned 14,051 shares in the company, valued at $1,026,566.06. This represents a 7.66% increase in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which can be accessed through this hyperlink. Also, VP Lipen Yuan acquired 1,000 shares of the firm’s stock in a transaction that occurred on Tuesday, August 18th. The shares were purchased at an average price of $74.50 per share, with a total value of $74,500.00. Following the completion of the acquisition, the vice president owned 6,000 shares of the company’s stock, valued at $447,000. This represents a 20.00% increase in their position. The disclosure for this purchase is available in the SEC filing. Insiders have bought 8,043 shares of company stock valued at $598,956 over the last ninety days. 1.11% of the stock is owned by insiders.

Trending Headlines about Taiwan Semiconductor Manufacturing Here are the key news stories impacting Taiwan Semiconductor Manufacturing this week:

Positive Sentiment: AI demand is driving strong growth. Recent coverage highlights TSMC’s better-than-expected quarterly results, record profits and upgraded 2026 outlook. Demand for advanced chips used in data centers and AI systems continues to exceed supply, supporting revenue, earnings and pricing power. TSMC Stock: AI Demand Drives Strong Q3 Results Positive Sentiment: Large chip orders reinforce the demand outlook. ByteDance, Alibaba and Tencent reportedly ordered approximately $35 billion of Nvidia chips. Although Nvidia may not be able to fulfill all the orders immediately, the news signals substantial ongoing demand for the advanced chips manufactured by TSMC and its ecosystem partners. ByteDance, Alibaba and Tencent Just Ordered $35 Billion of Nvidia Chips Positive Sentiment: Long-term earnings potential remains attractive. Analysts and commentators see TSMC benefiting from AI infrastructure investment through 2030, with one bullish projection suggesting the stock could reach $1,200 by then. The forecast is speculative, but it reflects expectations for strong growth in advanced-node production and AI-related revenue. Prediction: TSMC Stock Is Going to $1,200 by 2030 Positive Sentiment: Capacity investments could expand future revenue. TSMC is spending billions to increase production, including in the United States, while benefiting from data-center demand. The global FinFET market is also projected to expand substantially through 2030, creating an additional long-term tailwind. A $4 Billion Reason to Buy TSMC Stock Now Neutral Sentiment: Market volatility is still elevated. Chip stocks recovered after an early sell-off, but concerns about AI financing, crowded valuations and the sustainability of infrastructure spending could continue to cause short-term swings. Broader semiconductor sentiment may affect TSM even when company-specific fundamentals remain strong. Negative Sentiment: Margins may face temporary pressure. The ramp-up of the 2nm process and overseas fabrication plants is increasing costs and could weigh on gross margins. Analysts generally view this as a temporary investment phase rather than evidence of weakening demand, but it remains a near-term earnings risk. Taiwan Semiconductor Manufacturing Price Performance Shares of NYSE TSM opened at $431.87 on Thursday. The firm has a market cap of $2.24 trillion, a PE ratio of 27.79, a PEG ratio of 0.86 and a beta of 1.37. The company has a current ratio of 2.46, a quick ratio of 2.25 and a debt-to-equity ratio of 0.14. Taiwan Semiconductor Manufacturing Company Ltd. has a 1-year low of $266.82 and a 1-year high of $487.47. The company has a fifty day moving average price of $434.84 and a 200 day moving average price of $419.64.

Taiwan Semiconductor Manufacturing (NYSE:TSM – Get Free Report) last released its earnings results on Tuesday, September 8th. The semiconductor company reported $4.62 earnings per share (EPS) for the quarter. Taiwan Semiconductor Manufacturing had a return on equity of 42.84% and a net margin of 51.51%. The firm had revenue of $46.87 billion during the quarter. Research analysts predict that Taiwan Semiconductor Manufacturing Company Ltd. will post 17.03 earnings per share for the current fiscal year.

Taiwan Semiconductor Manufacturing Cuts Dividend The company also recently disclosed a quarterly dividend, which will be paid on Thursday, January 7th. Stockholders of record on Thursday, December 10th will be given a dividend of $1.0854 per share. This is a decrease from Taiwan Semiconductor Manufacturing’s previous quarterly dividend of $1.1136. This represents a $4.34 annualized dividend and a dividend yield of 1.0%. The ex-dividend date of this dividend is Thursday, December 10th. Taiwan Semiconductor Manufacturing’s payout ratio is currently 22.27%.

(Free Report)

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), commonly known as TSMC, is a dedicated semiconductor foundry headquartered in Hsinchu, Taiwan. The company manufactures integrated circuits for customers that design their own chips, allowing semiconductor, electronics, and technology companies to outsource production rather than operate their own fabrication facilities.

TSMC provides wafer fabrication services across a broad range of process technologies, including advanced nodes used in high-performance computing, smartphones, automotive systems, and artificial intelligence applications.

Read More Five stocks we like better than Taiwan Semiconductor Manufacturing GM Beat and Added a $20 Billion Buyback—Why Did the Stock Fall? Intercepting Growth: Karman Secures $218M Lockheed Martin Deal Tech Stocks Took a Hit—These 2 Pharma Stocks Are Near New Highs Chip Stocks Have Pulled Back—Here’s How 3 Semiconductor ETFs Stack Up for Investors Want to see what other hedge funds are holding TSM? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM – Free Report).

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Canoe Financial LP decreased its position in shares of Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM – Free Report) by 10.8% during the third quarter, according to the company in its most recent filing with the SEC. The institutional investor owned 642,620 shares of the semiconductor company’s stock after selling 77,950 shares during the quarter. Taiwan Semiconductor Manufacturing makes up 3.6% of Canoe Financial LP’s holdings, making the stock its 3rd largest holding. Canoe Financial LP’s holdings in Taiwan Semiconductor Manufacturing were worth $295,091,000 at the end of the most recent quarter.

Several other hedge funds also recently bought and sold shares of the company. Tiger Global Management LLC lifted its position in shares of Taiwan Semiconductor Manufacturing by 49.4% in the first quarter. Tiger Global Management LLC now owns 5,565,074 shares of the semiconductor company’s stock valued at $1,880,717,000 after acquiring an additional 1,839,600 shares in the last quarter. Sei Investments Co. grew its position in shares of Taiwan Semiconductor Manufacturing by 11.8% during the first quarter. Sei Investments Co. now owns 2,591,510 shares of the semiconductor company’s stock worth $875,802,000 after purchasing an additional 274,389 shares in the last quarter. Assenagon Asset Management S.A. grew its position in shares of Taiwan Semiconductor Manufacturing by 67.2% during the third quarter. Assenagon Asset Management S.A. now owns 1,717,515 shares of the semiconductor company’s stock worth $783,513,000 after purchasing an additional 690,523 shares in the last quarter. Bessemer Group Inc. grew its position in shares of Taiwan Semiconductor Manufacturing by 7.9% during the first quarter. Bessemer Group Inc. now owns 1,781,764 shares of the semiconductor company’s stock worth $602,147,000 after purchasing an additional 130,602 shares in the last quarter. Finally, AMF Tjanstepension AB raised its stake in Taiwan Semiconductor Manufacturing by 6.4% during the 1st quarter. AMF Tjanstepension AB now owns 1,632,738 shares of the semiconductor company’s stock valued at $551,784,000 after purchasing an additional 98,123 shares during the period. Institutional investors own 16.51% of the company’s stock.

Wall Street Analysts Forecast Growth TSM has been the topic of a number of research analyst reports. DA Davidson reissued a “buy” rating and issued a $500.00 price target on shares of Taiwan Semiconductor Manufacturing in a report on Friday, October 16th. Weiss Ratings cut shares of Taiwan Semiconductor Manufacturing from a “buy (b-)” rating to a “hold (c+)” rating in a research report on Tuesday, October 6th. Sanford C. Bernstein boosted their target price on shares of Taiwan Semiconductor Manufacturing from $430.00 to $554.00 and gave the stock an “outperform” rating in a report on Tuesday, August 11th. Wall Street Zen lowered shares of Taiwan Semiconductor Manufacturing from a “strong-buy” rating to a “buy” rating in a research report on Saturday, August 8th. Finally, Stifel Nicolaus assumed coverage on shares of Taiwan Semiconductor Manufacturing in a research report on Tuesday, September 1st. They set a “buy” rating and a $515.00 target price for the company. Three investment analysts have rated the stock with a Strong Buy rating, eleven have assigned a Buy rating and two have issued a Hold rating to the stock. According to data from MarketBeat, Taiwan Semiconductor Manufacturing presently has an average rating of “Buy” and a consensus target price of $528.78.

View Our Latest Stock Analysis on Taiwan Semiconductor Manufacturing Taiwan Semiconductor Manufacturing Price Performance Taiwan Semiconductor Manufacturing stock opened at $431.87 on Thursday. Taiwan Semiconductor Manufacturing Company Ltd. has a 52-week low of $266.82 and a 52-week high of $487.47. The company has a quick ratio of 2.25, a current ratio of 2.46 and a debt-to-equity ratio of 0.14. The firm’s fifty day moving average is $434.84 and its 200 day moving average is $419.64. The company has a market cap of $2.24 trillion, a price-to-earnings ratio of 27.79, a PEG ratio of 0.86 and a beta of 1.37.

Taiwan Semiconductor Manufacturing (NYSE:TSM – Get Free Report) last issued its quarterly earnings data on Tuesday, September 8th. The semiconductor company reported $4.62 EPS for the quarter. Taiwan Semiconductor Manufacturing had a net margin of 51.51% and a return on equity of 42.84%. The business had revenue of $46.87 billion during the quarter. Sell-side analysts forecast that Taiwan Semiconductor Manufacturing Company Ltd. will post 17.03 EPS for the current fiscal year.

Taiwan Semiconductor Manufacturing Cuts Dividend The firm also recently declared a quarterly dividend, which will be paid on Thursday, January 7th. Investors of record on Thursday, December 10th will be issued a $1.0854 dividend. This represents a $4.34 dividend on an annualized basis and a dividend yield of 1.0%. The ex-dividend date of this dividend is Thursday, December 10th. This is a negative change from Taiwan Semiconductor Manufacturing’s previous quarterly dividend of $1.1136. Taiwan Semiconductor Manufacturing’s payout ratio is 22.27%.

Trending Headlines about Taiwan Semiconductor Manufacturing Here are the key news stories impacting Taiwan Semiconductor Manufacturing this week:

Positive Sentiment: AI demand is driving strong growth. Recent coverage highlights TSMC’s better-than-expected quarterly results, record profits and upgraded 2026 outlook. Demand for advanced chips used in data centers and AI systems continues to exceed supply, supporting revenue, earnings and pricing power. TSMC Stock: AI Demand Drives Strong Q3 Results Positive Sentiment: Large chip orders reinforce the demand outlook. ByteDance, Alibaba and Tencent reportedly ordered approximately $35 billion of Nvidia chips. Although Nvidia may not be able to fulfill all the orders immediately, the news signals substantial ongoing demand for the advanced chips manufactured by TSMC and its ecosystem partners. ByteDance, Alibaba and Tencent Just Ordered $35 Billion of Nvidia Chips Positive Sentiment: Long-term earnings potential remains attractive. Analysts and commentators see TSMC benefiting from AI infrastructure investment through 2030, with one bullish projection suggesting the stock could reach $1,200 by then. The forecast is speculative, but it reflects expectations for strong growth in advanced-node production and AI-related revenue. Prediction: TSMC Stock Is Going to $1,200 by 2030 Positive Sentiment: Capacity investments could expand future revenue. TSMC is spending billions to increase production, including in the United States, while benefiting from data-center demand. The global FinFET market is also projected to expand substantially through 2030, creating an additional long-term tailwind. A $4 Billion Reason to Buy TSMC Stock Now Neutral Sentiment: Market volatility is still elevated. Chip stocks recovered after an early sell-off, but concerns about AI financing, crowded valuations and the sustainability of infrastructure spending could continue to cause short-term swings. Broader semiconductor sentiment may affect TSM even when company-specific fundamentals remain strong. Negative Sentiment: Margins may face temporary pressure. The ramp-up of the 2nm process and overseas fabrication plants is increasing costs and could weigh on gross margins. Analysts generally view this as a temporary investment phase rather than evidence of weakening demand, but it remains a near-term earnings risk. Insider Activity In related news, VP Bor-Zen Tien acquired 1,000 shares of the firm’s stock in a transaction on Monday, August 3rd. The shares were acquired at an average cost of $73.06 per share, for a total transaction of $73,060.00. Following the completion of the transaction, the vice president directly owned 14,051 shares in the company, valued at approximately $1,026,566.06. This trade represents a 7.66% increase in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this hyperlink. Also, VP Lipen Yuan acquired 1,000 shares of the stock in a transaction dated Tuesday, August 18th. The stock was bought at an average cost of $74.50 per share, with a total value of $74,500.00. Following the completion of the purchase, the vice president directly owned 6,000 shares in the company, valued at approximately $447,000. The trade was a 20.00% increase in their ownership of the stock. Additional details regarding this purchase are available in the official SEC disclosure. In the last quarter, insiders purchased 8,043 shares of company stock valued at $598,956. 1.11% of the stock is currently owned by company insiders.

(Free Report)

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), commonly known as TSMC, is a dedicated semiconductor foundry headquartered in Hsinchu, Taiwan. The company manufactures integrated circuits for customers that design their own chips, allowing semiconductor, electronics, and technology companies to outsource production rather than operate their own fabrication facilities.

TSMC provides wafer fabrication services across a broad range of process technologies, including advanced nodes used in high-performance computing, smartphones, automotive systems, and artificial intelligence applications.

See Also Five stocks we like better than Taiwan Semiconductor Manufacturing GM Beat and Added a $20 Billion Buyback—Why Did the Stock Fall? Intercepting Growth: Karman Secures $218M Lockheed Martin Deal Tech Stocks Took a Hit—These 2 Pharma Stocks Are Near New Highs Chip Stocks Have Pulled Back—Here’s How 3 Semiconductor ETFs Stack Up for Investors Want to see what other hedge funds are holding TSM? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM – Free Report).

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Diversify Advisory Services LLC decreased its position in Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM – Free Report) by 7.6% during the third quarter, according to its most recent disclosure with the Securities and Exchange Commission. The firm owned 101,595 shares of the semiconductor company’s stock after selling 8,369 shares during the quarter. Taiwan Semiconductor Manufacturing makes up 0.6% of Diversify Advisory Services LLC’s investment portfolio, making the stock its 29th largest position. Diversify Advisory Services LLC’s holdings in Taiwan Semiconductor Manufacturing were worth $42,899,000 at the end of the most recent quarter.

A number of other hedge funds have also recently modified their holdings of TSM. Fiduciary Advisors Inc. boosted its holdings in shares of Taiwan Semiconductor Manufacturing by 200.0% during the third quarter. Fiduciary Advisors Inc. now owns 60 shares of the semiconductor company’s stock worth $27,000 after purchasing an additional 40 shares during the period. Evolution Wealth Management Inc. grew its stake in shares of Taiwan Semiconductor Manufacturing by 257.7% in the first quarter. Evolution Wealth Management Inc. now owns 93 shares of the semiconductor company’s stock worth $31,000 after purchasing an additional 67 shares during the last quarter. Cedar Mountain Advisors LLC increased its holdings in Taiwan Semiconductor Manufacturing by 88.2% during the 2nd quarter. Cedar Mountain Advisors LLC now owns 64 shares of the semiconductor company’s stock valued at $31,000 after purchasing an additional 30 shares during the period. Financial Freedom LLC purchased a new position in Taiwan Semiconductor Manufacturing during the 1st quarter valued at about $32,000. Finally, Markowski Investments purchased a new position in Taiwan Semiconductor Manufacturing during the 2nd quarter valued at about $33,000. Hedge funds and other institutional investors own 16.51% of the company’s stock.

Wall Street Analyst Weigh In
A number of research analysts have commented on the company. Zacks Research raised Taiwan Semiconductor Manufacturing from a “hold” rating to a “strong-buy” rating in a research report on Thursday, July 16th. Bank of America lifted their price objective on Taiwan Semiconductor Manufacturing from $490.00 to $590.00 and gave the stock a “buy” rating in a research report on Wednesday, June 24th. Wall Street Zen cut Taiwan Semiconductor Manufacturing from a “strong-buy” rating to a “buy” rating in a research note on Saturday, August 8th. Stifel Nicolaus initiated coverage on Taiwan Semiconductor Manufacturing in a research note on Tuesday, September 1st. They set a “buy” rating and a $515.00 target price on the stock. Finally, DA Davidson restated a “buy” rating and set a $500.00 target price on shares of Taiwan Semiconductor Manufacturing in a report on Friday, October 16th. Three analysts have rated the stock with a Strong Buy rating, eleven have issued a Buy rating and two have given a Hold rating to the company. According to data from MarketBeat.com, the stock currently has a consensus rating of “Buy” and an average price target of $528.78.

Get Our Latest Report on TSM
Taiwan Semiconductor Manufacturing Trading Up 1.2%
TSM opened at $425.10 on Wednesday. The stock has a market cap of $2.20 trillion, a PE ratio of 27.35, a PEG ratio of 0.85 and a beta of 1.37. The company has a quick ratio of 2.25, a current ratio of 2.46 and a debt-to-equity ratio of 0.14. The business has a 50 day moving average of $434.78 and a 200-day moving average of $418.99. Taiwan Semiconductor Manufacturing Company Ltd. has a 52 week low of $266.82 and a 52 week high of $487.47.

Taiwan Semiconductor Manufacturing (NYSE:TSM – Get Free Report) last released its quarterly earnings results on Tuesday, September 8th. The semiconductor company reported $4.62 earnings per share for the quarter. The company had revenue of $46.87 billion for the quarter. Taiwan Semiconductor Manufacturing had a return on equity of 42.84% and a net margin of 51.51%. Equities research analysts predict that Taiwan Semiconductor Manufacturing Company Ltd. will post 17.03 earnings per share for the current fiscal year.

Taiwan Semiconductor Manufacturing Cuts Dividend
The company also recently disclosed a quarterly dividend, which will be paid on Thursday, January 7th. Shareholders of record on Thursday, December 10th will be given a dividend of $1.0854 per share. This is a decrease from Taiwan Semiconductor Manufacturing’s previous quarterly dividend of $1.1136. This represents a $4.34 annualized dividend and a yield of 1.0%. The ex-dividend date of this dividend is Thursday, December 10th. Taiwan Semiconductor Manufacturing’s payout ratio is 22.07%.

Insider Buying and Selling at Taiwan Semiconductor Manufacturing
In other Taiwan Semiconductor Manufacturing news, VP Bor-Zen Tien bought 1,000 shares of the company’s stock in a transaction dated Monday, August 3rd. The shares were purchased at an average price of $73.06 per share, for a total transaction of $73,060.00. Following the acquisition, the vice president owned 14,051 shares in the company, valued at approximately $1,026,566.06. This represents a 7.66% increase in their position. The purchase was disclosed in a filing with the SEC, which can be accessed through this link. Also, VP Lipen Yuan bought 1,000 shares of Taiwan Semiconductor Manufacturing stock in a transaction dated Tuesday, August 18th. The stock was acquired at an average cost of $74.50 per share, for a total transaction of $74,500.00. Following the completion of the transaction, the vice president directly owned 6,000 shares in the company, valued at approximately $447,000. This trade represents a 20.00% increase in their ownership of the stock. The disclosure for this purchase is available in the SEC filing. Insiders have acquired 8,043 shares of company stock valued at $598,956 in the last three months. Insiders own 1.11% of the company’s stock.

Key Stories Impacting Taiwan Semiconductor Manufacturing
Here are the key news stories impacting Taiwan Semiconductor Manufacturing this week:

Positive Sentiment: AI demand is driving strong growth. High-performance computing reportedly represented 68% of TSMC’s latest quarterly revenue, while demand for advanced chips remains well above available supply. Management has raised its forecast amid accelerating data-center and AI spending. The Most Important Number in Taiwan Semiconductor’s Earnings Report Was 68%
Positive Sentiment: Analysts remain bullish following the earnings beat. Recent coverage describes TSMC’s third-quarter report as a “beat and raise,” and Zacks upgraded TSM to Rank #1, or Strong Buy. Supporters argue that the company is trading at a market-level valuation despite growth that is expected to outpace the broader market. TSMC Upgraded to Strong Buy
Positive Sentiment: Expansion and customer demand support the long-term outlook. TSMC is investing billions to expand U.S. production, while Nvidia reportedly wants Samsung, Micron and SK Hynix to use TSMC’s 3-nanometer process for next-generation high-bandwidth-memory base dies. That could deepen TSMC’s role in AI-chip supply chains. A $4 Billion Reason to Buy TSMC Stock Now
Neutral Sentiment: Industry growth forecasts are favorable but not an immediate catalyst. Reports project substantial expansion in FinFET, 3D-chip and wafer-foundry markets through 2030, areas where TSMC is a major participant. These forecasts reinforce the structural opportunity but do not materially change near-term earnings expectations. FinFET Technology Global Strategic Business Report
Negative Sentiment: Broad AI-sector fears are limiting the rebound. Chip stocks initially sold off amid concerns about AI financing, stretched valuations and the possibility that the sector’s crowded trade could unwind. Although semiconductor shares recovered during the session, historical shakeout risks remain. Chip Stocks Shrug Off a Scary Morning
Negative Sentiment: Near-term margins could face pressure. The ramp-up of TSMC’s 2-nanometer technology and overseas fabs may temporarily reduce gross margins, even though analysts view the impact as an investment-related effect rather than evidence of weakening demand.

(Free Report)

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), commonly known as TSMC, is a dedicated semiconductor foundry headquartered in Hsinchu, Taiwan. The company manufactures integrated circuits for customers that design their own chips, allowing semiconductor, electronics, and technology companies to outsource production rather than operate their own fabrication facilities.

TSMC provides wafer fabrication services across a broad range of process technologies, including advanced nodes used in high-performance computing, smartphones, automotive systems, and artificial intelligence applications.

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Artificial intelligence (AI) stocks are in correction mode right now, driven by multiple factors, including high interest rates, a hotter-than-expected inflation report that could prompt further rate hikes, and concerns about the rising cost of financing the AI infrastructure build-out.

However, the actual results from AI industry bellwethers suggest otherwise. Taiwan Semiconductor Manufacturing (TSM +0.73%), the world's leading semiconductor foundry, released its third-quarter results on Oct. 15. TSMC is at the epicenter of the AI boom, manufacturing chips for leading chip designers and consumer electronics companies. Its numbers exceeded expectations, and the guidance indicates the growth rate is poised to accelerate.

I won't be surprised to see this semiconductor stock emerge stronger from the recent sectorwide sell-off and soar by 2030. Let's look at the reasons why TSMC could step on the gas and jump nearly 3x by the end of the decade to hit $1,200.

Image source: Taiwan Semiconductor Manufacturing.

TSMC accelerating growth is great news for investorsTSMC's Q3 revenue increased 41% year over year to $46.7 billion. Even better, the company's net profit margin increased to 51.1% last quarter from 45.7% in the year-ago period. As a result, TSMC's earnings per share jumped by 57% from the year-ago period to $4.60.

TSM Taiwan Semiconductor Manufacturing$428.18+$3.10 (+0.73%)

NYSE · As of 9:45 AM ET 10/21/26

Importantly, TSMC sees its growth rate picking up nicely this quarter. It expects $53.3 billion in Q4 revenue at the midpoint of its guidance range, implying a 58% increase over the prior-year period. Also, TSMC sees its operating margin at 57.5% in the current quarter, an improvement of 3.5 percentage points over last year.

The improvement in TSMC's revenue growth rate and its expanding margins can be attributed to the robust demand for the company's advanced chips used in AI data centers. TSMC management cited multiple AI-related catalysts driving growth. The emergence of agentic AI applications, the growing demand for server central processing units (CPUs) that run inference workloads, and the need for networking components to connect AI chip clusters and data centers are all boosting the demand for TSMC's chips.

It is worth noting that TSMC got 69% of its revenue from the advanced 2-nanometer (nm), 3nm, and 5nm nodes combined in the previous quarter. That was an improvement over the 60% revenue contribution from these nodes in the year-ago period. Notably, the company began recognizing revenue from the 2nm node last quarter and is now planning to aggressively ramp up output of chips manufactured using this process node.

The shift toward the 2nm node should be a tailwind for the company's revenue and earnings in the long run. That's because the 2nm node reportedly commands a 50% premium compared to the 3nm node. Also, TSMC has been gradually increasing the prices of its advanced process nodes. The Taiwanese giant is reportedly planning to implement a 5% to 10% price increase next year for advanced nodes, along with a 10% to 15% increase in advanced packaging prices. The higher prices should eventually filter down to the company's bottom line.

Another important point is that TSMC management expects its AI-related revenue to grow faster than the mid-to-high 50% compound annual growth rate (CAGR) it originally estimated through 2029. As such, it is easy to see why analysts have increased their earnings per share (EPS) expectations from TSMC.

TSM EPS Estimates for Current Fiscal Year data by YCharts

The math behind a $1,200 stock priceThe above chart indicates that TSMC's earnings could increase to $29.82 per share in 2028. The company delivered EPS of $10.65 in 2025, indicating its bottom line is on track to grow at a 40% CAGR through 2028.

Importantly, analysts expect TSMC to maintain an identical growth rate over the long run.

TSM EPS LT Growth Estimates data by YCharts

If TSMC's earnings increase by 43% in 2029 and 2030, its EPS could jump to $60.98 at the end of the forecast period (using 2028’s projected EPS as the base). The tech-laden Nasdaq-100 index has a forward earnings multiple of 22. Assuming TSMC trades at even 20 times earnings in 2030, its stock price could reach $1,219 (based on the $60.98 EPS estimate).

That implies a potential jump of nearly 3x in just over four years. So, this AI stock could surpass the $1,200 mark by 2030, suggesting investors should look at the bigger picture and consider buying TSMC for healthy long-term upside.

1.47K Followers

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Key Takeaways TSM's beat-and-raise Q3 report on Oct. 15 helps it earn a Zacks Rank #1 (Strong Buy).TSMC manufactures cutting-edge AI chips for Nvidia and beyond.Taiwan Semi is arguably the most important tech company in the world.The stock has dropped ~14% from its highs, and it looks like a value play. Technology, semiconductor, and artificial intelligence stocks jumped on Monday as the bulls attempt to push the Nasdaq back above its 50-day moving average heading into the heart of big tech earnings—Meta, Tesla, and others report later this week.

Now might be time to start buying tech and AI-boosted stocks again after the recent wave of selling because the core fundamentals of the most important companies remain impressive and bullish—even if cracks are showing up across the more speculative names.

Investors need to take a step back from the AI-fear-induced selling and look at the stellar earnings growth picture. Earnings expansion has proven over the long haul to be one of the biggest factors that drives stock prices higher.

The tech stock we dive into today—Taiwan Semiconductor—reported a strong beat-and-raise Q3 on October 15. TSMC’s strong upward earnings revisions earn the chip maker a Zacks Rank #1 (Strong Buy) right now.

Plus, Taiwan Semi has slipped ~14% from its early October records and is finding technical support.

Earnings Growth Tells Investors to Buy Stocks Right NowNearly every Zacks sector (15 out of 16) is expected to report YoY growth in the third quarter, highlighting a bullish backdrop beyond AI and Tech. Total third-quarter earnings are projected to jump 24.6% for the S&P 500, on 11.8% revenue expansion. Even taking the Tech sector out of the equation completely, S&P 500 earnings are projected to jump 14.5% in Q3.

But Q3’s strength is already priced into the market in a big way. This is why guidance for Q4 and beyond matters more than anything. Thankfully, the outlook for Q4 earnings jumped from 23.4% in early July to 27.7% before the big banks started reporting.

Image Source: Zacks Investment Research

Looking at the full year, total S&P 500 earnings are expected to grow by +28.8% in 2026 on +9.8% higher sales, with growth projected in 15 out of 16 sectors.

Better still, S&P 500 earnings are projected to grow another 19.0% in 2027 and 16.9% in 2028.

Image Source: Zacks Investment Research

The margins growth is also staggering, with S&P 500 margins projected to jump to 15.3% in 2026 and 18% in 2028, blowing away the previous 2021 peak of 13.2% and nearly doubling 2012.

Annual Tech sector margins are projected to reach 30.3% in 2026 and 32.8% in 2028, doubling 2010’s 15.6% and crushing 2021’s post Covid boom’s 20.7%.

TSMC: Best Tech Stock to Buy Now and Hold ForeverTaiwan Semiconductor Manufacturing Company ((TSM - Free Report) ) better known as Taiwan Semi or TSMC, is arguably the most critical technology company on the planet. TSMC physically builds and manufactures almost all the cutting-edge semiconductors for Nvidia ((NVDA - Free Report) ) and most other AI giants.

The pure-play foundry firm reportedly captures 60% of the entire global chip foundry market and 90% of advanced semiconductor manufacturing. Taiwan Semi spent decades building what’s now an impenetrable moat around its leading-edge chip-building business by earning the trust of customers like Apple, Nvidia, AMD, and Qualcomm.

Nvidia and other technology giants rely on TSMC because of its unmatched scale and expertise. Plus, they know that Taiwan Semi is not aiming to compete against them in the chip design business.

Image Source: Zacks Investment Research

Taiwan Semi is racing to address one of its only potential shortfalls: geopolitical fears, by expanding its manufacturing footprint outside of Taiwan into the U.S., Japan, and elsewhere.

TSMC grew its Q3 earnings by 58% on 41% higher revenue. The company said that 3- nanometer chip shipments accounted for 33% of its total wafer revenue, up from 23% in the year-ago period. More importantly, its most advanced 2-nm chips accounted for 8%, up from 3% in the second quarter.

The chip builder’s expansion at the bleeding edge is strong considering that it didn’t even start volume production on its 2-nm technologies until 4Q25. Advanced technologies, which TSMC defines as 7-nanometer and beyond, accounted for 79% of total wafer revenue up from 74% in the year-ago period.

Taiwan Semi management upped its guidance when it reported on October 15, citing “continued strong demand for our leading-edge process technologies, including the steep ramp-up of our 2-nanometer technology.” TSM’s recent upward earnings revisions earn it a Zacks Rank #1 (Strong Buy).

Image Source: Zacks Investment Research

The leading chip builder said earlier this year that it expects to grow its revenue by 30% in 2026 as part of a compound annual growth rate (CAGR) of ~25% between 2024 and 2029. Taiwan Semi’s strong outlook is likely to improve since it has already boosted its 2026 outlook after three straight beat-and-raise periods.

TSMC is projected to grow its revenue by 41% in 2026 and another 33% next year to reach $228 billion, adding more than $100 billion vs. 2025’s ~$122 billion total and more than tripling its 2023 figure. On the bottom line, it’s projected to grow its earnings by 59% in 2026 and 29% next year, doubling its 2025 total ($10.65) in the process ($21.85 a share in 2027).

Image Source: Zacks Investment Research

TSMC quadrupled the Zacks Tech sector during the last 20 years, soaring ~4,300%. The dividend-paying chip maker boasts a strong balance sheet with mountains of cash. TSM stock has outclimbed the entire Mag 7 over the last year and outpaced five of the seven in the past decade, lagging only Tesla and Nvidia.

Yet, investors can buy it down ~14% from its early October highs, with an average Zacks price target that implies 29% upside. It is attempting to retake its 50-day moving average after finding support at the technical range highlighted above. Taiwan Semi stock is also trading at some of its more oversold RSI levels in the past several years.

Image Source: Zacks Investment Research

TSMC is trading almost directly in line with the Tech sector and the S&P 500 (and its own 10-year median) despite its outperformance and at a 36% discount to its highs at 19.8X forward 12-month earnings. 

33.36K Followers

Analyst’s Disclosure: I/we have a beneficial long position in the shares of TSM, NVDA, AVGO, AMD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

TSMC (TSM - Free Report) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.

The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.

The power of a changing earnings picture in determining near-term stock price movements makes the Zacks rating system highly useful for individual investors, since it can be difficult to make decisions based on rating upgrades by Wall Street analysts. These are mostly driven by subjective factors that are hard to see and measure in real time.

Therefore, the Zacks rating upgrade for TSMC basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.

Most Powerful Force Impacting Stock PricesThe change in a company's future earnings potential, as reflected in earnings estimate revisions, has proven to be strongly correlated with the near-term price movement of its stock. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their transaction of large amounts of shares then leads to price movement for the stock.

Fundamentally speaking, rising earnings estimates and the consequent rating upgrade for TSMC imply an improvement in the company's underlying business. Investors should show their appreciation for this improving business trend by pushing the stock higher.

Harnessing the Power of Earnings Estimate RevisionsEmpirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, so it could be truly rewarding if such revisions are tracked for making an investment decision. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.

The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>> .

Earnings Estimate Revisions for TSMCFor the fiscal year ending December 2026, this chip company is expected to earn $16.90 per share, which is unchanged compared with the year-ago reported number.

Analysts have been steadily raising their estimates for TSMC. Over the past three months, the Zacks Consensus Estimate for the company has increased 3.4%.

Bottom LineUnlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of "buy" and "sell" ratings for its entire universe of more than 4,000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a "Strong Buy" rating and the next 15% get a "Buy" rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.

You can learn more about the Zacks Rank here >>>

The upgrade of TSMC to a Zacks Rank #1 positions it in the top 5% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.

TSMC (TSM - Free Report) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.

Over the past month, shares of this chip company have returned -5.1%, compared to the Zacks S&P 500 composite's +1.5% change. During this period, the Zacks Semiconductor - Circuit Foundry industry, which TSMC falls in, has lost 1.2%. The key question now is: What could be the stock's future direction?

Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.

Earnings Estimate RevisionsHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.

Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.

For the current quarter, TSMC is expected to post earnings of $5.00 per share, indicating a change of +59.2% from the year-ago quarter. The Zacks Consensus Estimate has changed +6.7% over the last 30 days.

For the current fiscal year, the consensus earnings estimate of $16.9 points to a change of +58.7% from the prior year. Over the last 30 days, this estimate has changed +2.1%.

For the next fiscal year, the consensus earnings estimate of $21.85 indicates a change of +29.3% from what TSMC is expected to report a year ago. Over the past month, the estimate has changed +3.1%.

With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #1 (Strong Buy) for TSMC.

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Revenue Growth ForecastWhile earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.

For TSMC, the consensus sales estimate for the current quarter of $53.71 billion indicates a year-over-year change of +59.2%. For the current and next fiscal years, $172.17 billion and $228.07 billion estimates indicate +40.6% and +32.5% changes, respectively.

Last Reported Results and Surprise HistoryTSMC reported revenues of $46.72 billion in the last reported quarter, representing a year-over-year change of +41.2%. EPS of $4.6 for the same period compares with $2.92 a year ago.

Compared to the Zacks Consensus Estimate of $45.62 billion, the reported revenues represent a surprise of +2.42%. The EPS surprise was +3.37%.

The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.

ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.

Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.

The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an A is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

TSMC is graded F on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

ConclusionThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about TSMC. However, its Zacks Rank #1 does suggest that it may outperform the broader market in the near term.

The third-quarter results for Taiwan Semiconductor Manufacturing (TSM +1.97%) are in, and investors have plenty of reasons to be excited. TSMC reported Q3 revenue of $46.72 billion, a 41.2% increase from a year ago. Net income jumped 68.7%, while the company's gross profit margin reached 66.4%.

Those are impressive numbers by any measure, particularly for a company of TSMC's size. But there's another figure buried in the company's earnings presentation that I think is even more important. High-performance computing (HPC) accounted for a whopping 68% of TSMC's quarterly revenue, with sales in that business increasing 22% from Q2.

That tells us quite a bit about where TSMC's growth is coming from -- and why its artificial intelligence (AI) business remains such an important opportunity for investors.

Image source: TSMC.

AI is becoming an even bigger part of TSMC's business
TSMC is the biggest chip foundry in the world, manufacturing chips for companies such as Nvidia, Advanced Micro Devices, and Apple. TSMC has an overwhelming 72.5% of the global market share and, in 2025, produced more than 12,600 products using 305 separate process technologies.

That business model gives TSMC an interesting advantage. It doesn't necessarily have to predict which chip designer will come out on top because it can manufacture chips for competing companies. And increasingly, those chips are being used for high-performance computing.

HPC includes processors used in AI accelerators, data centers, and other demanding computing applications. It's a broader category than artificial intelligence alone, but AI is an important driver of demand for the advanced chips that TSMC manufactures.

In Q3, HPC generated more than two-thirds of the company's revenue compared with just 21% from smartphones. And while TSMC's overall revenue increased 16.2% sequentially, HPC revenue grew even faster at 22%.

Image source: TSMC.

The growth also comes as major technology companies continue investing in the computing infrastructure needed to train and operate increasingly powerful AI models. Those investments create demand for advanced processors, and TSMC manufactures many of the chips used in those systems.

Advanced manufacturing strengthens TSMC's advantage
The growth in high-performance computing is particularly encouraging given the technology behind those chips. TSMC said that its advanced manufacturing processes, which include 7-nanometer technology and smaller, accounted for 79% of Q3 wafer revenue. Its newest 2-nanometer technology already represented 8% of wafer revenue, while 3-nanometer chips accounted for another 33%.

Here's why that's important: Smaller manufacturing processes mean that chips can be more powerful and efficient, which are important qualities for AI data centers, where computing performance and electricity consumption can have a substantial effect on operating costs.

That's one reason I've remained bullish on TSMC. Its manufacturing capabilities give the company a competitive advantage that's difficult to duplicate, while demand for advanced computing continues to expand. And the latest results suggest that customers are putting those capabilities to work.

TSM Taiwan Semiconductor Manufacturing$420.74+$8.13 (+1.97%)

NYSE · As of 10:32 AM ET 10/19/26

Is TSMC stock still worth buying?
TSMC expects Q4 revenue between $52.3 billion and $54.3 billion, indicating that management anticipates another sequential increase in sales. For the full year, the company now expects revenue growth of approximately 44% in U.S. dollars.

While the current pace of AI infrastructure spending won't continue indefinitely, guidance from major chipmakers indicates an ongoing appetite for more advanced AI processors -- and that should keep profits rolling in for TSMC.

With HPC now accounting for 68% of revenue and growing faster than the rest of the business, TSMC is demonstrating just how valuable that position has become. That's the number I'd pay the most attention to in this earnings report.

Taiwan Semiconductor Manufacturing (TSM -2.28%) plans to spend $60 billion to $64 billion this year on new factories and equipment. That's a lot of cash going out the door, with capital spending totaling a third of trailing-12-month revenue. But for the world's largest chipmaker, it's a signal that more growth is coming.

On the Oct. 15 earnings call, CFO Wendell Huang tied spending to long-term demand from customers, including the emerging market for agentic AI -- autonomous software that completes tasks on its own. He also said spending from 2026 through 2028 should be significantly higher than in the previous three years.

Image source: Getty Images.

TSMC is chasing demand. Third-quarter revenue hit a record $46.7 billion, up 41% year over year, and management expects fourth-quarter revenue of $52.3 billion to $54.3 billion. CEO C.C. Wei said the gap between demand and supply remains "quite big." Huang added that if TSMC executes, revenue growth should outpace the increase in capital spending.

This is TSMC's scale at work. Even with investment in equipment to expand chipmaking capacity, it reported a stellar 51.1% profit margin in the third quarter, up from 45.7% in the year-ago quarter.

TSM Taiwan Semiconductor Manufacturing$412.61-$9.64 (-2.28%)

NYSE · As of 4:00 PM ET 10/16/26

Geopolitical risks in Asia remain. TSMC continues to invest in building new factories in Taiwan, while expanding overseas to diversify its operations. However, overseas plants in places like Arizona cost more to run and may weigh on future margins.

Still, the strong quarter and investment plans point to years of growth ahead, which makes the stock a buy for long-term investors. Taiwan Semiconductor stock is trading at 19 times 2027 earnings estimates, with the consensus estimate calling for earnings to grow 28% next year.

John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Bohdan Kucheriavyi is not a financial/investment advisor, broker, or dealer. He's solely sharing personal experience and opinion; therefore, all strategies, tips, suggestions, and recommendations shared are solely for informational purposes. There are risks associated with investing in securities. Investing in stocks, bonds, options, exchange-traded funds, mutual funds, and money market funds involves the risk of loss. Loss of principal is possible. Some high-risk investments may use leverage, which will accentuate gains & losses. Foreign investing involves special risks, including greater volatility and political, economic, and currency risks and differences in accounting methods. A security’s or a firm’s past investment performance is not a guarantee or predictor of future investment performance.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

When we think of the artificial intelligence (AI) boom, we might first think of the chip players making the headlines, from Nvidia to Advanced Micro Devices. We know them for the high-powered graphics processing units (GPUs) that fuel critical AI tasks such as the training and inference of models.

But those chips can't make it to commercialization without another company, and that's Taiwan Semiconductor Manufacturing (TSM -2.28%). TSMC is the manufacturer that makes most of today's leading chips, as it holds more than 70% of the global chip foundry market. So while Nvidia, AMD, and others design the chips, TSMC actually brings them from the drawing board to reality.

All of this has created tremendous growth for TSMC, and the latest earnings report illustrates this. Last week, the company reported record profit for the sixth straight quarter. How does this translate into stock performance? My prediction is that $1,000 invested in TSMC today will be worth this much by 2030...

Image source: Getty Images.

TSMC's market leadership Before we dive into those numbers, though, let's take a deeper look at TSMC. As mentioned, the company is the global leader in the foundry market, so it produces most of the chips in high demand today. This means that TSMC may benefit from the successes of all of the leading chip players -- not just one or two. And this positions the company very well for significant growth as the AI boom continues.

A look at the recent quarter illustrates the picture. In the third quarter, TSMC reported profit and revenue that surpassed analysts' estimates and forecast fourth-quarter revenue in the range of $52.3 billion and $54.3 billion. At the midpoint, that represents a 58% year-over-year increase.

TSMC's gross margin has declined slightly, and the company forecasts a decrease of 40 basis points to 66% at the midpoint for the fourth quarter. But it's important to keep in mind the reason behind that, and it's linked to growth. TSMC's ramp-up of its 2 nm technology, or next-generation manufacturing process, initially weighs on margins, and the company is also seeing pressure from the costs of its U.S. fabs. But productivity gains should offset this to a certain degree over time.

Importantly, TSMC chief C.C. Wei emphasized the ongoing strength of the AI market. "Recent developments are very positive to AI's long-term demand outlook," he said, noting the increasing adoption of agentic AI and the greater use of open-source AI models.

TSM Taiwan Semiconductor Manufacturing$412.61-$9.64 (-2.28%)

NYSE · As of 4:00 PM ET 10/16/26

Estimates call for a 30% increase in EPS Now, let's consider how that may translate into stock performance. TSMC has climbed more than 300% over the past three years and today trades at about $422, or 27x trailing 12-month earnings. A look at earnings per share estimates for TSMC over the coming few years shows a 30% increase from year to year.

TSM EPS Estimates for Current Fiscal Year data by YCharts

If the 30% growth trend continues, the company's earnings per share may total more than $38 in 2030.

That leaves room for the stock price to climb more than 135% to $1,000, as at that level, the stock would trade at a price-to-earnings ratio of 26. And market capitalization would reach $5 trillion. This is about the size of Nvidia right now, which is the biggest company by market value. In such a scenario, we could imagine other technology giants also increasing in market value.

Considering all of this, my prediction is that $1,000 invested in TSMC today could be worth $2,350 by 2030. Of course, this is built on the assumption that earnings growth continues at a particular pace. In the quarters to come, we could see certain variations of this scenario, from a lower-margin situation due to foundry expansion to higher demand that may drive greater revenue.

But given TSMC's leadership in the manufacturing space and the long-term AI growth picture, there's reason to be optimistic about the growth of a $1,000 investment in this chip giant.

Banque Pictet & Cie SA cut its holdings in Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM – Free Report) by 7.2% during the third quarter, according to its most recent Form 13F filing with the SEC. The fund owned 334,782 shares of the semiconductor company’s stock after selling 25,798 shares during the period. Taiwan Semiconductor Manufacturing accounts for about 1.1% of Banque Pictet & Cie SA’s portfolio, making the stock its 17th largest holding. Banque Pictet & Cie SA’s holdings in Taiwan Semiconductor Manufacturing were worth $152,733,000 at the end of the most recent quarter.

Several other hedge funds also recently added to or reduced their stakes in the business. Tiger Global Management LLC increased its holdings in Taiwan Semiconductor Manufacturing by 49.4% during the 1st quarter. Tiger Global Management LLC now owns 5,565,074 shares of the semiconductor company’s stock worth $1,880,717,000 after purchasing an additional 1,839,600 shares during the period. Invesco Ltd. boosted its stake in shares of Taiwan Semiconductor Manufacturing by 1.1% in the 4th quarter. Invesco Ltd. now owns 3,721,823 shares of the semiconductor company’s stock valued at $1,131,025,000 after buying an additional 40,842 shares during the period. Sei Investments Co. lifted its position in shares of Taiwan Semiconductor Manufacturing by 11.8% during the 1st quarter. Sei Investments Co. now owns 2,591,510 shares of the semiconductor company’s stock worth $875,802,000 after purchasing an additional 274,389 shares during the last quarter. Assenagon Asset Management S.A. lifted its position in shares of Taiwan Semiconductor Manufacturing by 67.2% during the 3rd quarter. Assenagon Asset Management S.A. now owns 1,717,515 shares of the semiconductor company’s stock worth $783,513,000 after purchasing an additional 690,523 shares during the last quarter. Finally, T. Rowe Price Investment Management Inc. lifted its position in shares of Taiwan Semiconductor Manufacturing by 168.6% during the 4th quarter. T. Rowe Price Investment Management Inc. now owns 2,093,115 shares of the semiconductor company’s stock worth $636,077,000 after purchasing an additional 1,313,917 shares during the last quarter. 16.51% of the stock is currently owned by hedge funds and other institutional investors.

Wall Street Analysts Forecast Growth A number of research firms recently commented on TSM. TD Cowen increased their target price on shares of Taiwan Semiconductor Manufacturing from $400.00 to $440.00 and gave the company a “hold” rating in a research report on Friday, July 17th. Needham & Company LLC boosted their price target on shares of Taiwan Semiconductor Manufacturing from $530.00 to $560.00 and gave the company a “buy” rating in a research report on Thursday. Zacks Research raised shares of Taiwan Semiconductor Manufacturing from a “hold” rating to a “strong-buy” rating in a research report on Thursday, July 16th. Weiss Ratings downgraded shares of Taiwan Semiconductor Manufacturing from a “buy (b-)” rating to a “hold (c+)” rating in a research note on Tuesday, October 6th. Finally, Wall Street Zen lowered Taiwan Semiconductor Manufacturing from a “strong-buy” rating to a “buy” rating in a report on Saturday, August 8th. Three equities research analysts have rated the stock with a Strong Buy rating, eleven have assigned a Buy rating and two have assigned a Hold rating to the company. According to MarketBeat, the company presently has an average rating of “Buy” and a consensus target price of $528.78.

View Our Latest Report on Taiwan Semiconductor Manufacturing Key Headlines Impacting Taiwan Semiconductor Manufacturing Here are the key news stories impacting Taiwan Semiconductor Manufacturing this week:

Positive Sentiment: Record results and strong guidance support the long-term outlook. Third-quarter net income rose 68.7% year over year to NT$763.1 billion, while revenue increased about 51% and exceeded analyst estimates. TSMC also forecast fourth-quarter revenue of $52.3 billion to $54.3 billion, well above the consensus estimate. TSMC posts record profit for a sixth straight quarter Positive Sentiment: AI demand remains the key growth driver. Advanced technologies represented 79% of wafer revenue, and management reported no signs of a slowdown in demand for AI and high-performance-computing chips. Full-year 2026 revenue growth is expected to be approximately 44%, while annual 2-nanometer capacity is projected to more than double in 2027. Three key takeaways for long-term investors Positive Sentiment: Analysts remain bullish. DA Davidson reaffirmed its Buy rating with a $500 target, while Needham raised its target to $560. Articles also highlight TSMC’s manufacturing scale and competitive moat as potential benefits from continued AI infrastructure investment. TSMC long-term investment outlook Neutral Sentiment: Capacity expansion is both an opportunity and a concern. TSMC is considering additional U.S. expansion, including potential involvement in Elon Musk’s proposed Texas “Terafab,” while Taiwan is planning Texas industrial parks for Nvidia suppliers. These projects could improve customer access and supply-chain resilience but increase execution and investment requirements. TSMC talks with Elon Musk’s Terafab Negative Sentiment: Large capital expenditures are weighing on sentiment. TSMC’s roughly $64 billion spending plan has prompted questions about returns, potential overcapacity and whether AI demand can justify the industry’s investment pace. Investors also remain concerned about AI companies’ debt financing and profitability. Why TSMC’s spending plan concerns investors Negative Sentiment: Sector-wide risk aversion is overpowering the earnings beat. Chip stocks are selling off amid inflation, higher interest rates, concerns about AI financing and questions about whether the AI boom has already been priced into valuations. Commentary also notes that TSMC’s strong results may have raised expectations too high. Chip stocks tumble on AI investment worries Insider Activity at Taiwan Semiconductor Manufacturing In other Taiwan Semiconductor Manufacturing news, VP Shyue-Shyh Lin bought 1,000 shares of the stock in a transaction that occurred on Tuesday, July 21st. The shares were purchased at an average cost of $74.13 per share, for a total transaction of $74,130.00. Following the transaction, the vice president directly owned 30,269 shares in the company, valued at $2,243,840.97. The trade was a 3.42% increase in their ownership of the stock. The purchase was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this hyperlink. Also, VP Lipen Yuan bought 350 shares of the business’s stock in a transaction on Tuesday, August 18th. The stock was purchased at an average price of $73.58 per share, with a total value of $25,753.00. Following the completion of the transaction, the vice president directly owned 2,000 shares of the company’s stock, valued at $147,160. This trade represents a 21.21% increase in their ownership of the stock. The SEC filing for this purchase provides additional information. Insiders have bought a total of 16,043 shares of company stock worth $1,185,746 in the last ninety days. 1.11% of the stock is owned by insiders.

Taiwan Semiconductor Manufacturing Stock Performance Shares of NYSE:TSM opened at $413.15 on Friday. The business has a 50-day moving average of $434.71 and a two-hundred day moving average of $417.11. The firm has a market capitalization of $2.14 trillion, a PE ratio of 26.59, a P/E/G ratio of 0.87 and a beta of 1.37. The company has a debt-to-equity ratio of 0.14, a current ratio of 2.46 and a quick ratio of 2.25. Taiwan Semiconductor Manufacturing Company Ltd. has a 12 month low of $266.82 and a 12 month high of $487.47.

Taiwan Semiconductor Manufacturing (NYSE:TSM – Get Free Report) last issued its quarterly earnings data on Tuesday, September 8th. The semiconductor company reported $4.62 earnings per share (EPS) for the quarter. Taiwan Semiconductor Manufacturing had a net margin of 51.51% and a return on equity of 42.84%. The company had revenue of $46.87 billion during the quarter. As a group, research analysts forecast that Taiwan Semiconductor Manufacturing Company Ltd. will post 16.65 earnings per share for the current year.

Taiwan Semiconductor Manufacturing Cuts Dividend The company also recently disclosed a quarterly dividend, which will be paid on Thursday, January 7th. Investors of record on Thursday, December 10th will be issued a $1.0854 dividend. This is a drop from Taiwan Semiconductor Manufacturing’s previous quarterly dividend of $1.1136. The ex-dividend date of this dividend is Thursday, December 10th. This represents a $4.34 dividend on an annualized basis and a dividend yield of 1.1%. Taiwan Semiconductor Manufacturing’s dividend payout ratio is 24.96%.

(Free Report)

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), commonly known as TSMC, is a Taiwan-based semiconductor manufacturer and the world’s largest dedicated semiconductor foundry. Founded in 1987 by Morris Chang, the company pioneered the pure-play foundry model, producing chips designed by other companies rather than selling products under its own semiconductor brand.

TSMC manufactures a broad range of integrated circuits, including advanced logic chips used in high-performance computing, smartphones, automotive systems, communications equipment, and consumer electronics.

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SummaryQ3 revenue reached $46.7 billion, while Q4 guidance implies 14% sequential growth despite increasingly difficult comparisons.HPC reached 68% of revenue as Taiwan Semiconductor Manufacturing Company said AI demand continues to exceed available semiconductor capacity.N2 already represents 8% of wafer revenue, while annual N2 capacity should more than double during 2027.TSM's $412 price offers improving risk-reward, with my base valuation supporting approximately $440 to $483 per share. J Studios/DigitalVision via Getty Images

The Q3 report from Taiwan Semiconductor Manufacturing Company (TSM) made it very difficult to continue arguing about an impending slowdown in the AI semiconductor cycle. TSM reported $46.7 billion in revenues and $4.60 in

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Nvidia (NVDA -1.43%) investors got a new look at the demand for artificial intelligence (AI) chips on Thursday, Oct. 15. Taiwan Semiconductor Manufacturing (TSM -2.28%), which makes chip wafers for Nvidia, posted third-quarter revenue of $46.7 billion -- over the high end of the $44.6 billion to $45.8 billion range management had forecast in July.

And TSMC's chairman and CEO, C.C. Wei, didn't sound worried about what's next.

"[T]he demand actually is still far above our capability today to supply," Wei said on the company's earnings call. He made the comment in an answer where he wouldn't say if that demand comes more from AI accelerators or central processing units (CPUs).

Nvidia stock, though, headed the other way. Shares ended Thursday at $217.23, off around 9% from the record close they set on Oct. 6 ($239.24).

I think the gap between what Nvidia's supplier is reporting and what Nvidia's stock is doing makes the shares worth buying now.

Image source: Taiwan Semiconductor Manufacturing.

TSMC's biggest platform keeps acceleratingShowing how much AI is powering the chipmaker, TSMC's revenue from high-performance computing (the platform that includes AI chips) climbed 22% sequentially in the third quarter. That was faster than the platform's 20% sequential growth in the second quarter. High-performance computing is now 68% of TSMC's revenue, up from 57% in the third quarter of 2025. Overall, TSMC's revenue grew 41% year over year in U.S. dollars. Net income, which TSMC reports in New Taiwan dollars, rose 69%.

Management expects more. TSMC guided for fourth-quarter revenue of $52.3 billion to $54.3 billion. The midpoint is around 14% over the third quarter's total, so the company is calling for another double-digit sequential gain after a 16% climb in the third quarter.

TSMC now sees 2026 revenue growing about 44% in U.S. dollars, up from its July outlook of a little over 40%.

TSM Taiwan Semiconductor Manufacturing$412.61-$9.64 (-2.28%)

NYSE · As of 4:00 PM ET 10/16/26

Wei also pushed back on any idea that AI chip demand is cooling. He was asked about TSMC's forecast that its AI accelerator revenue would rise at an average yearly rate in the mid- to high-50% range from 2024 to 2029. Wei said "we did not see any sign of slowdown," adding that the rate "probably will be higher."

What does this mean for Nvidia?TSMC doesn't say how much of its revenue comes from Nvidia. So its report isn't a direct preview of Nvidia's next quarter.

But Nvidia sells chips on both sides of the split Wei wouldn't talk about. Its graphics processing units (GPUs) remain its main business, and last quarter it announced Vera, a CPU made for AI agents.

TSMC's fourth-quarter outlook covers October to December. And because chips take months to move from TSMC's wafers to finished Nvidia products, that forecast arguably says more about Nvidia's next few quarters than about the one ending this month.

And Nvidia's own results point the same way as TSMC's. Revenue rose to $96.2 billion in the second quarter of its fiscal 2027 (which ended July 26, 2026), up 18% from fiscal Q1 and 106% year over year. Management forecast around $108 billion in fiscal Q3, plus or minus 2%.

Of course, a shortage doesn't last forever. TSMC spent around $40.6 billion on capital expenditures through the first three quarters of 2026, and when supply eventually catches up to demand, Nvidia might lose some of its pricing power. But that doesn't look like a problem for the next few quarters.

The stock is cheaper than its supplier'sAt around $217, Nvidia's share price is about 14 times the earnings per share analysts expect for its next fiscal year (ending January 2028), on average. At the Oct. 6 record, it was around 15 times expected earnings. TSMC's shares, by comparison, go for about 19 times earnings, based on analysts' average forecast for 2027.

NVDA Nvidia$214.13-$3.10 (-1.43%)

NASDAQ · As of 4:00 PM ET 10/16/26

Put another way, investors are paying less for every dollar of Nvidia's expected profit than for TSMC's, even though Nvidia's revenue climbed more than twice as fast in each company's latest quarter. The market seems to doubt that Nvidia's growth can last.

Sure, that doubt might be right. If AI spending slows, Nvidia's sales could drop faster than those of a foundry with many kinds of customers. But TSMC's report doesn't show any sign of that yet.

In the end, I'd consider buying Nvidia stock at this price. I'd just keep the stake small. The stock is risky and volatile. After all, the shares dropped 9% in just seven trading days this month.

Over the past four years, a $1,000 investment in TSMC (TSM -2.28%), the world's largest contract chipmaker, would have grown to about $4,540. That multibagger gain was primarily driven by the rapid growth of the cloud infrastructure and AI markets.

Could a fresh $1,000 investment in TSMC grow to more than $4,500 again by the end of the decade? Let's review its catalysts, challenges, and valuations to see if it's possible.

Image source: Getty Images.

Understanding TSMC's core advantages TSMC manufactures the world's smallest, densest, and most power-efficient chips for fabless chipmakers like Nvidia (NVDA -1.43%), AMD, and Broadcom. To maintain its lead over other foundries, TSMC purchases more extreme ultraviolet (EUV) lithography systems -- which are required for optically etching tiny circuit patterns onto silicon wafers -- from ASML (ASML -0.96%) than any other foundry.

Once a fabless chipmaker is locked into TSMC's manufacturing services, the astronomical switching costs prevent it from moving to a competing foundry such as Samsung or Intel (INTC -5.79%). TSMC also offers a higher yield (the percentage of functional chips per wafer) than other foundries. So while TSMC's competitors might offer lower manufacturing costs per wafer, their lower yields and tighter production bottlenecks can easily offset those savings.

TSM Taiwan Semiconductor Manufacturing$412.61-$9.64 (-2.28%)

NYSE · As of 4:00 PM ET 10/16/26

TSMC's scale enables it to push ASML's current-gen "low-NA" EUV systems to their theoretical limits (to 1.4nm) before it needs to buy ASML's pricier "high-NA" EUV systems to produce even smaller chips. By comparison, Intel is making the leap to high-NA much earlier than TSMC -- but that expansion will be costly because those systems cost about twice as much as low-NA systems. By waiting until the early 2030s to ramp up its purchases of high-NA EUV systems, TSMC can wait for the technology to mature and become cheaper before making that leap.

In the third quarter of 2026, TSMC generated 68% of its revenue from the high-performance computing (HPC) market -- which includes Nvidia's data center GPUs and Broadcom's custom application-specific integrated circuits (ASICs) for hyperscalers.

That segment's revenue surged 22% sequentially in the third quarter, accelerating from 20% sequential growth in the first and second quarters. That acceleration should continue as long as more companies upgrade their cloud and AI data centers. It also generated a third of its revenue from its smallest 3nm chips -- which include Nvidia's Vera Rubin (Vera CPU and Rubin GPU) chips and the base die of the latest high-bandwidth memory (HBM) chips.

How much bigger could TSMC grow? Back in January, TSMC expected its revenue to grow in the mid-to-high 20% range in USD terms for the full year. But it raised its outlook to over 30% growth in its first-quarter report, just over 40% in its second-quarter report, and 44% in its third-quarter report. It kept raising its guidance to reflect the feverish growth of the generative AI market.

For 2026, analysts expect its revenue and EPS to rise 46% and 66%, respectively, in TWD terms. From 2026 to 2028, they expect its revenue and EPS to grow at CAGRs of 32% and 31%, respectively. Yet TSMC's stock still looks cheap at 16 times next year's earnings.

If TSMC matches analysts' expectations through 2028, grows its EPS at a 25% CAGR for the next three years, and trades at 20 times forward earnings by late 2030, its stock could turn $1,000 into over $3,000. That wouldn't match its performance over the past four years, but it would still beat the S&P 500's (^GSPC -1.09%) average annual total return of about 10%.

TSMC might face unpredictable challenges over the next few years, including conflicts between Taiwan and China, the costly construction of its overseas plants (especially in the U.S.), and an abrupt slowdown in AI spending. But over the long term, it will likely remain a linchpin of the global semiconductor market -- and it should generate impressive gains for its patient investors.

Leo Sun has positions in ASML. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Broadcom, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Key Takeaways TSMC posts record Q3 profit as AI chip demand fuels growth.Q4 revenue outlook tops estimates, signaling sustained AI momentum.SPWO, JHAI and ADVE offer significant exposure to TSMC stock.
Taiwan Semiconductor Manufacturing Co. (TSM - Free Report) reported record third-quarter earnings that exceeded analyst expectations, as robust global demand for artificial intelligence (AI) chips continued to drive growth at the world's largest contract chipmaker.

TSMC Beats Q3 Earnings EstimatesTSMC's third-quarter revenues of NT$1.49 trillion ($46.36 billion) topped the Zacks Consensus Estimate of $45.62 billion. TSMC reported third-quarter 2026 earnings per share (EPS) of $4.60, ahead of the Zacks Consensus Estimate of $4.45.

TSMC's net profit climbed 68.7% year over year, marking its sixth consecutive quarter of record earnings, per CNBC. Its operating margin reached 58.7%, surpassing the upper end of the company's guidance range of 58%. The strong margin performance highlights TSMC's pricing power amid surging demand for advanced semiconductors.

Strong Q4 Outlook Signals Sustained AI MomentumTSMC expects fourth-quarter revenues of $52.3 billion to $54.3 billion. At the midpoint, the forecast implies a 14% sequential increase and a 58% jump from the year-ago quarter, according to the company's earnings call. The forecast beats the Zacks Consensus Estimate of $48.78 billion.

The chipmaker also expects capital expenditure during 2026-2028 to be significantly higher than in the preceding three years as it expands capacity to meet rising customer demand.

The company expects fourth-quarter growth to be supported by continued demand for its advanced manufacturing technologies, including the ramp-up of its 2-nanometer process.

Advanced Chips and AI Drive Revenue MixAdvanced technologies, defined as 7-nanometer and more advanced processes, accounted for 79% of TSMC's total wafer revenue in the third quarter.

Among individual process technologies, 3-nanometer chips generated the largest share of revenue at 33%, followed by 5-nanometer and 7-nanometer chips.

High-performance computing was TSMC's largest revenue-generating platform, contributing 68% of total revenue.

TSMC said demand for AI chips remains strong, thanks to the expanding adoption of agentic AI and open-source AI models. These developments could broaden AI adoption and increase demand for advanced semiconductors.

The company also highlighted growing demand for AI accelerators, processors used in agentic AI applications and networking. It expects semiconductors to play an increasingly important role in the global AI supply chain.

Free Cash Flow Surges as U.S. Expansion AdvancesTSMC's free cash flow rose sharply to NT$476.56 billion in the third quarter, compared with NT$139.38 billion a year earlier, reflecting a substantial improvement in cash generation.

On the manufacturing front, the company said it had completed construction of its second fabrication plant in Arizona and was installing equipment. Mass production is expected to begin in the third quarter of 2027, slightly ahead of the previous schedule.

TSMC's board also approved a cash dividend of NT$7 per share for the second quarter.

TSMC ETFs in FocusOverall, TSMC's record profitability, robust revenue outlook and plans for increased capital expenditure underscore its confidence in the long-term growth of AI-related semiconductor demand.

Apart from the TSMC stock itself, investors can play it in ETF form. The TSMC-heavy ETFs include SP Funds S&P World (ex-US) ETF (SPWO - Free Report) (TSMC’s weight 20%), Janus Henderson Global Artificial Intelligence ETF (JHAI - Free Report) (about 15% exposure) and Matthews Asia Dividend Active ETF (ADVE - Free Report) (about 14% focus).