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TSM Defies Volatility With Robust AI Demand and Strategic Expansion
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Key Takeaways
TSM beat Q1 2025 earnings and revenue estimates, with $2.12 EPS and $25.5B in revenue.
AI chip demand is set to double in 2025, with TSM projecting $20B in AI-specific annual revenue.
TSM is hedging $18B against FX swings as U.S.-China tensions and global expansion introduce new risks.
Taiwan Semiconductor Manufacturing Company Limited (TSM - Free Report) has had a solid 2025, with a current share price of around $228. Its robust performance has been closely tied to the booming demand for artificial intelligence (AI) and the broader recovery in semiconductor stocks. TSM is part of the Zacks Semiconductor – Circuit Foundry industry, which is in the top 2% of all Zacks sub-industries.
In late January, when DeepSeek introduced its R1 AI model, markets reacted sharply. TSM's shares plunged as much as 13% on the first trading day back from Lunar New Year, marking the steepest drop in nearly six months. Yet, while the DeepSeek shock triggered short-term volatility, TSM stood firm with its structural resilience. DeepSeek’s model used medium-range H800 chips, which are restricted under U.S. export rules, but TSM remains the dominant producer for cutting-edge 5nm and 3nm nodes powering AI applications.
The AI-driven surge is powerfully reshaping TSM’s narrative. As the world’s dominant chip manufacturer that controls roughly two-thirds of the global third-party market, TSM manufactures chips for AI giants like Nvidia, AMD and Broadcom. Its advanced nodes make it the go-to company for AI accelerators used in data centers, smartphones, PCs etc.
TSM reported first-quarter 2025 earnings of $2.12/share on April 17, beating the Zacks Consensus Estimate of $2.03. This signifies an earnings surprise of 4.4%. The company also reported revenues of $25.5 billion, beating the Zacks Consensus Estimate of $25.3 billion.
TSM isn’t just riding a cyclical semiconductor upswing, it is at the heart of structural transformation in computing. Its AI-chip business is expected to double in 2025, with annual AI-specific revenues projected at around $20 billion. Meanwhile, its CoWoS packaging margins exceed 60%, driven largely by AI and high-performance computing. Such strength helped lift net profit 54-57% year-over-year in late 2024.
However, there are serious headwinds, primarily arising from geopolitical friction. The U.S.-China tension continues to linger. TSM has set aside about $18 billion for hedging against Taiwan-dollar volatility, as shifts in the USD/NTD rate can impact its margins. Cybersecurity threats and supply-chain nationalization efforts also introduce risk, even as TSM expands fabs in the United States, Japan and Germany.
TSM currently carries a Zacks Rank #2 (Buy). Year to date, TSM has grown 15.8% compared with a 13.4% advance for its Zacks Peer Group. United Microelectronics Corporation (UMC - Free Report) and GLOBALFOUNDRIES Inc. (GFS - Free Report) are noteworthy competitors in the same space. While UMC currently also carries a #2, GFS has a #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bottom Line
In short, TSM in 2025 is a powerhouse riding the global AI wave. Its growth isn’t just cyclical, it’s strategic. Even as investors monitor geopolitical and currency risks, most see the company as the backbone of the AI infrastructure, with a long runway ahead. Its role in supplying chips for everything from generative AI to AI-powered smartphones cements its central position in the coming decade.
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TSM Defies Volatility With Robust AI Demand and Strategic Expansion
Key Takeaways
Taiwan Semiconductor Manufacturing Company Limited (TSM - Free Report) has had a solid 2025, with a current share price of around $228. Its robust performance has been closely tied to the booming demand for artificial intelligence (AI) and the broader recovery in semiconductor stocks. TSM is part of the Zacks Semiconductor – Circuit Foundry industry, which is in the top 2% of all Zacks sub-industries.
In late January, when DeepSeek introduced its R1 AI model, markets reacted sharply. TSM's shares plunged as much as 13% on the first trading day back from Lunar New Year, marking the steepest drop in nearly six months. Yet, while the DeepSeek shock triggered short-term volatility, TSM stood firm with its structural resilience. DeepSeek’s model used medium-range H800 chips, which are restricted under U.S. export rules, but TSM remains the dominant producer for cutting-edge 5nm and 3nm nodes powering AI applications.
The AI-driven surge is powerfully reshaping TSM’s narrative. As the world’s dominant chip manufacturer that controls roughly two-thirds of the global third-party market, TSM manufactures chips for AI giants like Nvidia, AMD and Broadcom. Its advanced nodes make it the go-to company for AI accelerators used in data centers, smartphones, PCs etc.
TSM reported first-quarter 2025 earnings of $2.12/share on April 17, beating the Zacks Consensus Estimate of $2.03. This signifies an earnings surprise of 4.4%. The company also reported revenues of $25.5 billion, beating the Zacks Consensus Estimate of $25.3 billion.
TSM isn’t just riding a cyclical semiconductor upswing, it is at the heart of structural transformation in computing. Its AI-chip business is expected to double in 2025, with annual AI-specific revenues projected at around $20 billion. Meanwhile, its CoWoS packaging margins exceed 60%, driven largely by AI and high-performance computing. Such strength helped lift net profit 54-57% year-over-year in late 2024.
However, there are serious headwinds, primarily arising from geopolitical friction. The U.S.-China tension continues to linger. TSM has set aside about $18 billion for hedging against Taiwan-dollar volatility, as shifts in the USD/NTD rate can impact its margins. Cybersecurity threats and supply-chain nationalization efforts also introduce risk, even as TSM expands fabs in the United States, Japan and Germany.
TSM currently carries a Zacks Rank #2 (Buy). Year to date, TSM has grown 15.8% compared with a 13.4% advance for its Zacks Peer Group. United Microelectronics Corporation (UMC - Free Report) and GLOBALFOUNDRIES Inc. (GFS - Free Report) are noteworthy competitors in the same space. While UMC currently also carries a #2, GFS has a #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bottom Line
In short, TSM in 2025 is a powerhouse riding the global AI wave. Its growth isn’t just cyclical, it’s strategic. Even as investors monitor geopolitical and currency risks, most see the company as the backbone of the AI infrastructure, with a long runway ahead. Its role in supplying chips for everything from generative AI to AI-powered smartphones cements its central position in the coming decade.