Key Takeaways
- TSMC stock is up 30% in the past year but sits 19% below its October high, after chip stocks sold off on Lam Research’s and Intel’s reports.
- TSMC’s business kept getting stronger, with a record $46.7 billion third quarter and analysts expecting EPS to more than double from 2025 to 2027.
- Micron’s far bigger gain rode soaring memory prices, while a reported packaging price hike of up to 20% that customers like AMD would pay shows TSMC’s capacity is still scarce.
- The stock trades below its five-year average forward P/E even as estimates climb, so the pullback looks like a buy ahead of TSMC’s mid-January report.
Taiwan Semiconductor Manufacturing (TSM) stock is up 30% in the past year, and it’s 19% below the high it hit on Oct. 5. TSMC’s business is having its best year yet.
Memory makers got the bigger gains, with Micron Technology (MU) up 239%. Much of TSMC’s slide came from other companies’ reports, including a weak outlook from Intel (INTC). And TSMC’s own news kept improving, down to a reported price hike that customers like Advanced Micro Devices (AMD) would pay.
Every quarter topped the last
In July, TSMC hit the top of its revenue forecast, raised its 2026 outlook and lifted its capex budget to $60 billion to $64 billion. Then came a record third quarter: $46.72 billion of revenue, up 41.2%, at a 66.4% gross margin. TSMC now expects about 44% growth for 2026 and guided fourth-quarter revenue to $52.3 billion to $54.3 billion, with CFO Wendell Huang pointing in the release to “the steep ramp-up of our 2-nanometer technology.”
Analysts see 2027 EPS of $23.39, more than twice 2025’s $10.65:
Memory got the price spike
Micron’s revenue rose 379% from a year earlier to $54.23 billion in the quarter ended Sept. 3, as memory prices soared. TSMC doesn’t get that kind of lift: its CFO has said recent price increases only covered inflation in tools, materials and labor. But memory prices can fall as fast as they rose, and TSMC’s growth comes from customers moving to its newest chips.
TIKR tracks 35 analysts on TSMC. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on TSMC, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See TSMC’s Analyst Ratings
Lam Research and Intel set off the slide
TSMC lost much of its ground from the Oct. 5 high in two chip selloffs: Oct. 22, after Lam Research’s report, and Oct. 30, after Intel’s.
Intel, still up 46% over the year, expects fourth-quarter revenue of $15 billion to $16 billion as PC sales slow. CEO Lip-Bu Tan said the priority is freeing up supply “to meet extraordinary demand for our Xeon family.” Short of capacity for its own server chips, Intel will struggle to win foundry customers from TSMC.
Customers are paying up for scarce capacity
Taiwan’s Commercial Times reported in late October that TSMC is preparing to raise prices for CoWoS, its AI chip packaging, by up to 20%. TSMC hasn’t confirmed it. Packaging should be a bit over 10% of revenue this year, so a full 20% on all of it would add roughly 2% to sales.
Customers can afford it. AMD, up 88% over the year, just reported record third-quarter data center revenue of $8.5 billion, up 97%. Its gross margin was 54%, against TSMC’s 66.4%: the supplier earns the fatter margin.
At 16x, I’d buy more
TSMC traded at 16x forward earnings on Nov. 2. Its five-year average is 18x, and it peaked at 25x in July 2024:
It was about 23x at the end of June, and the 2027 EPS estimate has risen 16% since. Bernstein raised its target to $600 from $554 on Nov. 4.
The risk is the bill: most of TSMC’s spending this year goes to fabs that start producing in 2028 and 2029, and if AI spenders trim their budgets before then, estimates fall. Revenue fell 4.5% in NT dollars in 2023, the year after its last record capex.
Still, estimates are rising, customers are paying up, and the stock costs less than usual. I’d add to TSMC here.
October revenue comes first, in the next week or so: the fourth-quarter guide implies about NT$554 billion to NT$576 billion a month. Then comes mid-January’s report, with 2027 guidance. If that guide comes in light, 16x is no bargain.
So what is TSMC stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what TSMC could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
