TSMC is a step ahead of the market
The Taiwan Semiconductor Manufacturing Company (TSMC) has been in the spotlight recently, and the investors are gradually waking up and taking note. The stock of TSMC jumped 18.2% over the last month, which is well above twice the level of the Zacks Computer and Technology sector, which went up by 6.3% during the same period.
The company also beat some of the biggest names in chipmaking. As NVIDIA stock rose 11.5% and AMD 8.8%, Broadcom dropped 2.1%. The steady expansion of TSMC is a reflection of its dominance of the global chipmaking industry and a top vendor in the rapidly growing sector of artificial intelligence (AI).
At Friday’s close at $292.19, TSMC is a whisker below its 52-week high of $296.72 — and investors are asking: Is it still a buy, or time to take profits?
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The AI boom continues to pump growth
And one of its primary reasons for success is the AI boom, and it isn’t showing any signs of slowing down. The world’s biggest contract chipmaker, TSMC, makes the advanced semiconductors driving everything from smartphones to supercomputers.
But as far as AI chips go, TSMC is the sole provider. NVIDIA, Broadcom, Marvell, and the others among the tech giants all bank on TSMC’s manufacturing capacity to make their AI accelerators and processors.
TSMC’s sales involving AI more than tripled in 2024 to account for a mid-teen percentage of the company’s total revenue. Management estimates that the number will double in 2025 and accelerate at a clip of some 40% annually for the next five years. That makes TSMC one of the biggest winners of the AI boom — one of the biggest makers of the chips driving everything from ChatGPT-like applications to autonomous cars.
Spending large on the ffuture
To meet expanding demands for even more sophisticated chips, TSMC does not shy away from spending. It will spend $38 billion to $42 billion on capital expenditures in 2025 — a significant jump from $29.8 billion in 2024.
Approximately 70% of the investment will go towards new manufacturing technologies, maintaining TSMC’s leadership in the next-generation chipmaking, namely 3-nanometer (3nm) and 5-nanometer (5nm) technology.
These investments are done to reinforce its dominance over competitors like Samsung and Intel, which are attempting to gain a larger share of the chip manufacturing industry.
Robust earnings indicate resilience
TSMC’s bottom line has also been as impressive. Second-quarter 2025 revenue was higher by 44% year over year to $30.07 billion, and earnings per share (EPS) increased 61% to $2.47.
Much of the expansion was driven by strong demand for its premium chips, as 3nm and 5nm nodes now account for 58% of total wafer revenue. The firm also improved its gross margin by 540 basis points to 58.6% on improved efficiency and higher sales of premium products.
On the robust performance, the 2025 annual revenue growth target for TSMC was increased to 30% from its earlier mid-20% estimate. It also provided third-quarter revenue guidance of $31.8 billion–$33 billion, or 6%–10% quarter-over-quarter.
The annual revenue consensus forecast is $123.35 billion, as per a Zacks Investment Research report, keeping pace with expectations of continuous growth from analysts.
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Buy, hold, or wait for investors?
With TSMC shares peaking at all-time highs, investors are left wondering if there is any scope left for an upside. Although the pluses for the firm—robust demand, increasing AI business segment, and robust finances — all point to long-term growth, short-term fluctuations cannot be discounted. Rising competition, worldwide chip shortage, or geopolitical tensions about Taiwan can serve as dampeners.
But for such deep-pockets betting on the future of chip technology and artificial intelligence, TSMC remains one of the world’s most strategically important and financially secure firms.
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