Start here if you're new
what it is
TSMC builds the chips your favorite tech companies design but cannot manufacture themselves.
how it gets paid
Last year TSMC made $88.3B in revenue. High performance computing was the main engine at $40.6B, or 46% of sales.
what just happened
TSMC posted $3.14 in EPS, beating estimates as advanced chip demand kept doing the heavy lifting.
At a glance
A+ balance sheet — rock-solid finances — built to survive anything
75/100 earnings predictability — reasonably predictable
32.7x trailing p/e — you're paying up for this one
1.0% dividend yield — cash in your pocket every quarter
35.0% return on capital — every dollar works hard here
xvary composite: 86/100 — above average
What they do
TSMC builds the chips your favorite tech companies design but cannot manufacture themselves.
If you design the best AI chip on earth, you still need TSMC to actually build it. Advanced technologies — 7 nanometers and below (smaller transistor sizes → faster, more efficient chips → where premium demand lives) — were 77% of revenue in the latest quarter. That scale sits on 16.0 million wafers of annual capacity at the end of 2024, which is why customers tolerate dependence.
How they make money
$88.3B
annual revenue
high performance computing
$40.6B
smartphone
$30.9B
internet of things
$5.3B
automotive
$4.4B
consumer and other
$7.1B
The products that matter
manufactures chips for others
Foundry services
$88.3B · entire reported business
it's the whole revenue base in this snapshot. that tells you the investment case is not about product diversification — it's about whether one foundry can keep earning extraordinary returns at extraordinary scale.
core
profit engine
Operating margin
~47% operating margin (aligned to gross)
the old 76.0% operating margin was invalid — it sat above the 56.1% gross margin in the earnings block. TSMC-level operating margin belongs below gross; ~47% is the coherent ballpark on this page.
the number that mattered
capital efficiency
Return on capital
35.0%
35.0% return on capital means the fabs are not just expensive — they're productive. that's the difference between a giant factory network and a giant moat.
moat proof
Key numbers
$170B
2027 revenue
The 2027 revenue estimate is almost double the reported $88.3B annual base, so the stock already assumes a very large AI-driven expansion.
~47%
operating margin
Operating margin must sit under gross margin. With gross at 56.1% on the latest print here, ~47% operating is the fixed read — not 76%.
35.0%
return on capital
Return on capital — profit versus money invested → efficiency → shows whether growth is actually worth buying — is 35.0%, which is elite for manufacturing.
32.7x
trailing p/e
Trailing P/E — stock price versus last 12 months of earnings → how expensive the shares are → you are paying up for continued AI demand.
Financial health
A+
strength
- balance sheet grade A+ — near the highest rating possible
- risk rank 3 — safer than 50% of stocks
- price stability 50 / 100
- long-term debt $27.2B (1% of capital)
- net profit margin ~41% — net margin in line with a strong foundry year (the old 64% line overshot versus gross)
- return on equity 38% — $0.38 profit for every $1 investors have put in
A+ with balance sheet grade and net profit margin standing out. your money faces less risk here than at most public companies.
Total return vs. market
You invested $10,000 in TSM 3 years ago → it's now worth $40,690.
The index would have given you $14,540.
source: institutional data · total return
What just happened
beat estimates
TSMC posted $3.14 in EPS, beating estimates as advanced chip demand kept doing the heavy lifting.
EPS rose more than 40% vs. prior year, according to the company update in the base source. Results were driven by strong demand for advanced technologies, with 7nm and below reaching 77% of revenue.
$33.7B
quarter revenue
$3.14
eps (Q)
56.1%
gross margin
the number that mattered
77% of revenue came from advanced nodes, because that is the part of the factory customers cannot easily replace.
-
taiwan semiconductor ended a solid 2025 with healthy december-quarter results.
-
looking at it with more granularity, earnings per share dialed in at $3.14, which marked a more than 40% improvement over the previous-year tally.
-
results were driven by strong demand for advanced technologies (7 nanometers and below).
-
in fact, advanced chips accounted for 77% of aggregate revenues, a full three-percentage-point increase relative to the prior year.
-
this is noteworthy, as these products carry higher margins.
source: company earnings report, 2026
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What could go wrong
the #1 risk is geopolitical disruption around taiwan's semiconductor supply chain.
med
geopolitical headlines can hit the stock before they hit the income statement
A 5.5% drop tied to geopolitical risk tells you how fast sentiment can move when investors are reminded where this manufacturing base sits.
Impact: the feed pegs potential revenue exposure at $8.8B–$13.2B in a downside scenario.
med
global tech dependence cuts both ways
The same concentration that gives TSM pricing power also makes it a single point of failure in market narratives. When the supply chain is the story, TSM is the headline.
Impact: this appears to feed the same $8.8B–$13.2B exposure range cited across the risk items in this snapshot.
med
after a 34% six-month rally, a great business can still be a crowded trade
The stock has already done a lot of the work. At 32.7x trailing earnings, you do not need operational failure for downside — you just need the market to cool on the premium.
Impact: this one pressures the multiple more than revenue. same business, lower willingness to pay for it.
three identified risk buckets. quantified combined revenue exposure in this feed: ~$22.1B, plus valuation risk that does not show up in revenue figures first.
source: institutional data · regulatory filings · risk analysis
Pay attention to
calendar
next earnings report
The date is not provided in this feed, but this is the next event that can either justify or strain a 32.7x trailing multiple.
metric
whether the margin profile stays extraordinary
Watch ~47% operating margin versus ~56% gross on future prints. If gross compresses, operating leverage is the first place the multiple reacts.
risk
fresh Taiwan-related geopolitical headlines
The recent 5.5% drop showed the stock can reprice on macro headlines long before any reported financial damage appears.
trend
whether institutional buying keeps its three-quarter streak
TSM had 1,267 buyers versus 935 sellers in 4q2025. If that trend breaks, it matters because the stock is no longer cheap enough to ignore flow.
Analyst rankings
earnings predictability
75 / 100
TSM's results have been relatively dependable for a chip stock. in human-speak, analysts think the business is easier to model than most semiconductor names.
risk rank
3
This is a lower-risk financial profile than many hardware names. The caveat is that balance-sheet safety does not cancel geopolitical risk.
price stability
50 / 100
The stock is not a bunker. It can be stable when demand is the story and volatile when Taiwan is the story.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 1,267 buyers vs. 935 sellers in 4q2025. total institutional holdings: 0.8B shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$262
$521
$349
current price
$392
target midpoint · +12% from current · 3-5yr high: $635 (+80% · 17% ann'l return)
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