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TSM Stock Trades Near 52-Week High: Time to Hold or Book Profits?
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Key Takeaways
TSMC shares have surged 46.5% YTD, trading just 7% below their 52-week high of $311.37.
AI chip demand tripled in 2024 sales, with AI revenues expected to double again in 2025.
High capital spending and new global fabs may pressure margins.
Taiwan Semiconductor Manufacturing Company (TSM - Free Report) , also known as TSMC, has had a remarkable run so far this year, with its shares soaring 46.5% year to date (YTD). The stock is benefiting from the AI boom by manufacturing advanced chips for major AI clients like NVIDIA (NVDA - Free Report) , Broadcom (AVGO - Free Report) and Marvell Technology (MRVL - Free Report) , which has led to record profits and a significant increase in revenues.
Shares of the company have outperformed the Zacks Computer and Technology sector’s YTD gain of 27.1%. Taiwan Semiconductor is also among the top-performing semiconductor stocks, including Broadcom, NVIDIA and Marvell Technology. YTD, shares of Broadcom and NVIDIA have soared 53.4% and 40%, respectively, while Marvell Technology declined 15.5%.
TSM YTD Price Return Performance
Image Source: Zacks Investment Research
At the closing price of $289.24 as of Nov. 6, TSM stock trades just 7% below the 52-week high of $311.37. At this price level, investors must be wondering whether to stay invested in the stock or book profits.
Let’s find out.
AI Boom: A Key Growth Catalyst for TSMC
Taiwan Semiconductor continues to lead the global chip foundry market. Its scale and technology make it the first choice for companies driving the AI boom. NVIDIA, Marvell and Broadcom all count on TSMC to build advanced graphics processing units (GPUs) and AI accelerators.
AI-related chip sales have become a major driver. In 2024, AI-related revenues tripled, making up a mid-teen percentage of Taiwan Semiconductor’s total revenues, and the momentum is far from over. Management expects AI revenues to double again in 2025 and grow 40% annually over the next five years. That makes TSMC central to the AI supply chain.
To keep up with the growing demand for AI chips, Taiwan Semiconductor is spending aggressively. The company is set to invest between $40 billion and $42 billion in capital expenditures in 2025, far outpacing its $29.8 billion investment in 2024. The bulk of this spending, around 70%, is focused on advanced manufacturing processes, ensuring TSMC stays ahead of other chip manufacturing rivals.
TSMC’s Strong Financial Performance
Taiwan Semiconductor’s latest earnings report highlights just how dominant the company remains. In the third quarter of 2025, TSM’s revenues surged 41% year over year to $33.1 billion, while earnings per share (EPS) jumped 39% to $2.92. This growth was powered by the booming demand for its advanced 3nm and 5nm nodes, which now account for 60% of total wafer sales. Gross margins improved 170 basis points to 59.5%, reflecting better cost efficiencies.
Taiwan Semiconductor Manufacturing Company Ltd. Price, Consensus and EPS Surprise
Buoyed by strong demand for its 3nm and 5nm chips, Taiwan Semiconductor raised its revenue growth guidance for full-year 2025 to a mid-30% range from around 30% projected earlier. For the fourth quarter, TSMC expects revenues in the range of $32.2-$33.4 billion. The Zacks Consensus Estimate for fourth-quarter and full-year 2025 revenues is pegged at $32.61 billion and $120.49 billion, respectively.
Low Valuation Makes TSM Still Attractive
Despite a robust rally, Taiwan Semiconductor stock still looks reasonably priced. It trades at a forward 12-month price-to-earnings (P/E) multiple of 24.15, which is lower than the sector average of 29.15. This discount adds to the appeal for long-term investors.
TSM Forward 12-Month P/E Multiple
Image Source: Zacks Investment Research
Compared with other major semiconductor players, Taiwan Semiconductor has a lower P/E ratio than Broadcom, NVIDIA and Marvell Technology. Currently, Broadcom, NVIDIA and Marvell Technology trade at P/E multiples of 53.10, 33.53 and 28.91, respectively.
Near-Term Risks Warrant a Cautious Approach to TSMC
Despite its strengths, Taiwan Semiconductor witnesses near-term hurdles. Softness in key markets like PCs and smartphones also dampens near-term prospects. These traditionally strong revenue drivers are projected to see only low single-digit growth in 2025, limiting Taiwan Semiconductor’s growth despite rising AI demand.
The company’s global expansion strategy adds further strain. New fabs in the United States (Arizona), Japan and Germany are vital for geopolitical risk mitigation, but they come with higher costs. These facilities are expected to drag down gross margins by 2-3 percentage points annually over the next three to five years due to higher labor and energy costs, along with lower utilization rates in the early stages.
Escalating geopolitical tensions, particularly U.S.-China relations, pose strategic risks. With significant revenue exposure to China, Taiwan Semiconductor is vulnerable to export restrictions, supply-chain disruptions or further regulatory pressure. These uncertainties could weigh on near-term performance.
Final Thoughts: Hold TSM Stock for Now
Taiwan Semiconductor remains a cornerstone of the semiconductor industry. Its unmatched capabilities in advanced chip manufacturing, strong exposure to AI demand and expanding capacity give it a solid long-term trajectory.
However, short-term headwinds, including weakness across the consumer end market, global expansion pressures and geopolitical friction, call for a more cautious stance. Given its valuation and growth backdrop, holding the stock makes the most sense right now.
Image: Bigstock
TSM Stock Trades Near 52-Week High: Time to Hold or Book Profits?
Key Takeaways
Taiwan Semiconductor Manufacturing Company (TSM - Free Report) , also known as TSMC, has had a remarkable run so far this year, with its shares soaring 46.5% year to date (YTD). The stock is benefiting from the AI boom by manufacturing advanced chips for major AI clients like NVIDIA (NVDA - Free Report) , Broadcom (AVGO - Free Report) and Marvell Technology (MRVL - Free Report) , which has led to record profits and a significant increase in revenues.
Shares of the company have outperformed the Zacks Computer and Technology sector’s YTD gain of 27.1%. Taiwan Semiconductor is also among the top-performing semiconductor stocks, including Broadcom, NVIDIA and Marvell Technology. YTD, shares of Broadcom and NVIDIA have soared 53.4% and 40%, respectively, while Marvell Technology declined 15.5%.
TSM YTD Price Return Performance
Image Source: Zacks Investment Research
At the closing price of $289.24 as of Nov. 6, TSM stock trades just 7% below the 52-week high of $311.37. At this price level, investors must be wondering whether to stay invested in the stock or book profits.
Let’s find out.
AI Boom: A Key Growth Catalyst for TSMC
Taiwan Semiconductor continues to lead the global chip foundry market. Its scale and technology make it the first choice for companies driving the AI boom. NVIDIA, Marvell and Broadcom all count on TSMC to build advanced graphics processing units (GPUs) and AI accelerators.
AI-related chip sales have become a major driver. In 2024, AI-related revenues tripled, making up a mid-teen percentage of Taiwan Semiconductor’s total revenues, and the momentum is far from over. Management expects AI revenues to double again in 2025 and grow 40% annually over the next five years. That makes TSMC central to the AI supply chain.
To keep up with the growing demand for AI chips, Taiwan Semiconductor is spending aggressively. The company is set to invest between $40 billion and $42 billion in capital expenditures in 2025, far outpacing its $29.8 billion investment in 2024. The bulk of this spending, around 70%, is focused on advanced manufacturing processes, ensuring TSMC stays ahead of other chip manufacturing rivals.
TSMC’s Strong Financial Performance
Taiwan Semiconductor’s latest earnings report highlights just how dominant the company remains. In the third quarter of 2025, TSM’s revenues surged 41% year over year to $33.1 billion, while earnings per share (EPS) jumped 39% to $2.92. This growth was powered by the booming demand for its advanced 3nm and 5nm nodes, which now account for 60% of total wafer sales. Gross margins improved 170 basis points to 59.5%, reflecting better cost efficiencies.
Taiwan Semiconductor Manufacturing Company Ltd. Price, Consensus and EPS Surprise
Taiwan Semiconductor Manufacturing Company Ltd. price-consensus-eps-surprise-chart | Taiwan Semiconductor Manufacturing Company Ltd. Quote
Buoyed by strong demand for its 3nm and 5nm chips, Taiwan Semiconductor raised its revenue growth guidance for full-year 2025 to a mid-30% range from around 30% projected earlier. For the fourth quarter, TSMC expects revenues in the range of $32.2-$33.4 billion. The Zacks Consensus Estimate for fourth-quarter and full-year 2025 revenues is pegged at $32.61 billion and $120.49 billion, respectively.
Low Valuation Makes TSM Still Attractive
Despite a robust rally, Taiwan Semiconductor stock still looks reasonably priced. It trades at a forward 12-month price-to-earnings (P/E) multiple of 24.15, which is lower than the sector average of 29.15. This discount adds to the appeal for long-term investors.
TSM Forward 12-Month P/E Multiple
Image Source: Zacks Investment Research
Compared with other major semiconductor players, Taiwan Semiconductor has a lower P/E ratio than Broadcom, NVIDIA and Marvell Technology. Currently, Broadcom, NVIDIA and Marvell Technology trade at P/E multiples of 53.10, 33.53 and 28.91, respectively.
Near-Term Risks Warrant a Cautious Approach to TSMC
Despite its strengths, Taiwan Semiconductor witnesses near-term hurdles. Softness in key markets like PCs and smartphones also dampens near-term prospects. These traditionally strong revenue drivers are projected to see only low single-digit growth in 2025, limiting Taiwan Semiconductor’s growth despite rising AI demand.
The company’s global expansion strategy adds further strain. New fabs in the United States (Arizona), Japan and Germany are vital for geopolitical risk mitigation, but they come with higher costs. These facilities are expected to drag down gross margins by 2-3 percentage points annually over the next three to five years due to higher labor and energy costs, along with lower utilization rates in the early stages.
Escalating geopolitical tensions, particularly U.S.-China relations, pose strategic risks. With significant revenue exposure to China, Taiwan Semiconductor is vulnerable to export restrictions, supply-chain disruptions or further regulatory pressure. These uncertainties could weigh on near-term performance.
Final Thoughts: Hold TSM Stock for Now
Taiwan Semiconductor remains a cornerstone of the semiconductor industry. Its unmatched capabilities in advanced chip manufacturing, strong exposure to AI demand and expanding capacity give it a solid long-term trajectory.
However, short-term headwinds, including weakness across the consumer end market, global expansion pressures and geopolitical friction, call for a more cautious stance. Given its valuation and growth backdrop, holding the stock makes the most sense right now.
Taiwan Semiconductor carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.