TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD (TSM)

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AI: Fair-priced

Price checkThe shares look fairly priced, because rapid growth offsets a demanding earnings multiple.

TSM closed at $426.35 on August 14, the last trading day before this review. Each U.S. depositary share represents five Taiwan shares. Replacing first-half 2025 earnings with first-half 2026 earnings and translating at NT$32 per dollar gives about $13.48 of trailing profit per depositary share. Investors therefore pay roughly $32 for each $1 of recent annual profit. A simple 2026 estimate based on current guidance lowers that to roughly 24–26 times. That is not cheap; fair value requires sustained strong growth, while current momentum prevents a clear overvaluation call.

Big pictureProfits and cash have grown strongly, but factory spending makes downturns visibly painful.

From 2019 to 2024, supplied revenue rose from NT$1.07 trillion to NT$2.89 trillion and net income from NT$354 billion to NT$1.16 trillion. In 2024, operating cash reached NT$1.83 trillion; after NT$956 billion of factory spending, cash left after running and investing in the business was about NT$870 billion, more than twice dividends. The cycle still matters: in 2023 revenue fell 4.5%, net income dropped 14.2%, and leftover cash was about NT$292 billion, below NT$318 billion of dividends. The 46% profit rebound in 2025 shows durability, not immunity.

Business strengthA large cash cushion and tiny share awards protect owners during heavy investment.

At 2024 year-end, cash and equivalents were NT$2.13 trillion against only NT$91.7 billion of debt, leaving NT$2.04 trillion net cash. Current assets were 2.36 times near-term liabilities, providing a strong liquidity buffer. Stock compensation was just NT$1.24 billion, roughly 0.1% of net income, so employee awards created little dilution. No buyback figure is supplied; capital returns were mainly NT$415 billion of dividends. By June 2026, cash had risen to NT$3.13 trillion, and the reported common-share count was 25.932 billion.

What could change the storyAdvanced chips can justify today’s price, while overspending or disruption would quickly challenge it.

Second-quarter 2026 revenue rose 36% and profit rose 77%; technologies at seven nanometers or smaller produced 77% of wafer revenue. Management guides third-quarter sales to $44.6–$45.8 billion with a 65%–67% gross margin, meaning sales left after direct production costs. Meeting that range while preserving cash after investment would strengthen the bull case. The bear case is the raised $60–$64 billion 2026 factory budget: weaker artificial-intelligence orders or costly overseas ramps could depress cash returns. A Taiwan production disruption would also hit leading-edge supply. Today’s price assumes growth stays well above the 2023 downturn.

$426.35 price considered

AI: News

Record profit, higher spendingRecord profit strengthened the growth case, but much higher factory spending tempered the celebration.

On July 16, TSMC reported second-quarter revenue of NT$1.270 trillion and net income of NT$706.56 billion, up 36.0% and 77.4% from a year earlier. It projected third-quarter revenue of $44.6–$45.8 billion and lifted 2026 spending to $60–$64 billion. The U.S. shares closed 2.3% lower that day. Strong profit raised expected business value, while heavier spending reduces near-term cash left for owners; broad technology weakness also mattered, so the price move cannot be assigned to earnings alone.

July sales accelerateJuly sales stayed exceptionally strong, supporting demand expectations beyond the record second quarter.

On August 10, TSMC reported July revenue of NT$467.58 billion, up 5.6% from June and 44.7% from July 2025. Revenue for January through July reached NT$2.872 trillion, 37.0% higher year over year. The release contained no profit or customer breakdown, so attributing all growth to artificial intelligence would be inference. Still, the pace supports management’s forecast for slightly above 40% U.S.-dollar revenue growth in 2026 and suggests leading-edge factory capacity remained heavily used.

U.S. expansion deepensThe added U.S. investment improves geographic resilience but raises the cost and execution burden.

On July 16, the Associated Press reported another $100 billion commitment to U.S. manufacturing, taking TSMC’s announced U.S. investment to $265 billion. The expansion should place more advanced chip and packaging capacity near major customers, reducing some geographic concentration. It also increases execution risk because overseas factories can cost more and take years to fill. The announcement coincided with the earnings-day share decline, but higher companywide spending guidance and a broad technology selloff prevent reliable attribution of its separate market effect.

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Free cash flow

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Financial statements

	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
Revenue	$2.89T	$2.16T	$2.26T	$1.59T	$1.34T	$1.07T	$1.03T	$977.45B	$947.94B	$843.50B
Gross profit	$1.62T	$1.18T	$1.35T	$819.54B	$711.13B	$492.70B	$497.87B	$494.83B	$474.83B	$410.39B
Research & development	$204.18B	$182.37B	$163.26B	$124.73B	$109.49B	$91.42B	$85.90B	$80.73B	$71.21B	$65.54B
Operating income	$1.32T	$921.47B	$1.12T	$649.98B	$566.78B	$372.70B	$383.62B	$385.56B	$377.96B	$320.05B
Net income	$1.16T	$851.74B	$992.92B	$592.36B	$510.74B	$353.95B	$363.05B	$345.00B	$331.71B	$302.85B
Basic EPSper diluted share	NT$44.68	NT$32.85	NT$38.29	NT$22.84	NT$19.70	NT$13.65	NT$14.00	NT$13.30	NT$12.79	NT$11.68
Diluted EPSper diluted share	NT$44.67	NT$32.85	NT$38.29	NT$22.84	NT$19.70	NT$13.65	NT$14.00	NT$13.30	NT$12.79	NT$11.68

Review source filings at SEC.gov ↗

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys106$1.52M disclosed value

Sells (SEC code S)1$13.97M disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Jun 30, 2026Form 4	Tien Bor-ZenVP	BuyCommon Shares (2330.TW) · indirect	1.0K	$75.70	$75.7K	1.0K
Jun 29, 2026Form 4	Tien Bor-ZenVP	BuyCommon Shares (2330.TW)	1.0K	$76.64	$76.6K	12.1K
Jun 22, 2026Form 4	Yuan LipenVP	BuyCommon Shares (2330.TW)	1.0K	$79.19	$79.2K	5.0K
Jun 15, 2026Form 4	Yuan LipenVP	BuyCommon Shares (2330.TW)	1.0K	$75.26	$75.3K	4.0K
Jun 5, 2026Form 4	Zhang Kevin XiaoqiangSVP and Deputy Co-COO	BuyCommon Shares (2330.TW) · indirect	62	$76.01	$4.7K	7.2K

Review ownership filings at SEC.gov ↗

TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD (TSM)

Financial charts

Financial statements

Insider buys & sells