We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
TSM vs. MU: Which Semiconductor Stock Is the Better Buy Post-Earnings?
Read MoreHide Full Article
Key Takeaways
TSMC's Q3 revenues jumped 41.2% year over year, while EPS per ADR rose 57.5% on AI chip demand.
Micron's fiscal Q4 revenues surged 379.3% as AI infrastructure spending fueled demand for memory products.
Micron offers a lower forward P/E, but TSMC gains an edge from advanced chipmaking and earnings visibility.
Despite delivering strong earnings and revenues that exceeded the Zacks Consensus Estimate, Taiwan Semiconductor Manufacturing (TSM - Free Report) , or TSMC, and Micron Technology (MU - Free Report) have pulled back. TSM and MU have dipped 7% and 15.2%, respectively, so far this month, potentially offering investors an opportunity to gain exposure to the booming AI semiconductor market at more attractive prices.
TSMC delivered third-quarter 2026 earnings of $4.60 per ADR, beating the Zacks Consensus Estimate by 3.4%, while revenues surged 41.2% year over year to $46.72 billion, surpassing estimates by 2.4%. Riding strong demand for advanced chips, particularly for AI applications, the company expects fourth-quarter revenues of $52.3 billion to $54.3 billion, signaling continued momentum into year-end.
Micron reported an impressive fiscal fourth-quarter 2026 performance, with adjusted EPS of $33.42 exceeding the Zacks Consensus Estimate by 5.73%. Revenues soared 379.3% year over year to $54.23 billion, beating estimates by 6.33%, as surging AI infrastructure investment fueled demand for memory products, including high-bandwidth memory (HBM).
Image Source: Zacks Investment Research
While both companies continue to benefit from substantial earnings growth and the expanding AI ecosystem, broader concerns about intensifying Chinese competition in the memory market, rising U.S. inflation and interest-rate expectations and the sustainability of AI infrastructure spending weigh on semiconductor stocks.
Against this backdrop, the recent pullbacks in TSMC and Micron raise an important question — could this dip present a timely buying opportunity and which semiconductor stock should investors prioritize? Let’s delve deeper.
Investment Case for TSM
TSMC is positioned to benefit from sustained AI infrastructure investment. In the third quarter, revenues surged 41.2% year over year, while EPS per ADR rose 57.5%, exceeding expectations. High-performance computing revenue rose 22% sequentially and accounted for 68% of total revenues, while advanced technologies contributed 79% of wafer revenues.
The outlook remains encouraging. TSMC expects fourth-quarter revenues of $52.3 billion to $54.3 billion, implying approximately 58% year-over-year growth at the midpoint. Its financial position is also robust, with $126 billion in cash and marketable securities at quarter-end and approximately $28.8 billion in quarterly operating cash flow.
However, gross margin declined sequentially from 67.7% to 66.4% as 2-nanometer production ramped up. Overseas fabrication facilities are another source of pressure, with management expecting their gross-margin impact to widen to 3–4 percentage points over the next few years.
Image Source: Zacks Investment Research
Investment Case for Micron
Micron’s fiscal fourth-quarter 2026 results were strong, showing the earnings potential of the AI-driven memory market. Revenues soared to $54.23 billion from $11.32 billion a year earlier, while adjusted EPS reached $33.42, up from $3.03. Core Data Center revenue climbed to $18 billion from $1.58 billion a year earlier, reflecting surging demand for memory to support AI infrastructure.
The company expects further acceleration in fiscal first-quarter 2027, forecasting revenues of $61.5 billion (+/- $1.5 billion) and adjusted EPS of $38.15 (+/- $1). This outlook indicates Micron’s opportunity to capitalize on demand for high-bandwidth memory, server DRAM and other data-center products. Liquidity is another strength. Micron generated $43.97 billion in operating cash flow during the fourth quarter and ended fiscal 2026 with $73.48 billion in cash, marketable investments and restricted cash.
However, the principal risks are the sustainability of exceptional memory pricing and earnings, the capital required to expand manufacturing capacity, and the cyclical nature of the memory industry. Micron’s forecast of continued growth is encouraging, but it needs to be analyzed whether demand and pricing can sustain such elevated profitability as supply expands.
Image Source: Zacks Investment Research
MU Looks Cheaper Than TSM, but Is Its Low Valuation Sustainable?
Image Source: Zacks Investment Research
TSMC trades at a forward 12-month P/E of 19.76, below its historical median of 21.14 and marginally above the Computer and Technology sector’s 18.86. Micron appears significantly cheaper at 4.97X forward earnings versus its historical median of 10.07 and the sector’s 18.86.
At present, MU offers greater valuation appeal following its recent pullback, while TSMC trades closer to its historical median. However, Micron’s unusually low multiple may reflect cyclical memory earnings and peak-profitability concerns.
Our Take
Both TSMC and Micron sport a Zacks Rank #1 (Strong Buy), reflecting favorable earnings estimate revisions following their strong quarterly results and upbeat outlooks. While MU appears more attractively valued based on its forward P/E, its earnings remain more exposed to memory pricing fluctuations and industry cyclicality.
If investors had to choose just one, TSMC gets a marginal edge for its strong position in advanced chip manufacturing, diversified exposure to AI-driven demand across high-performance computing and other end markets and more established earnings visibility. Although margin pressures from advanced-node ramp-ups and overseas expansion warrant monitoring, TSMC offers a balance of AI-driven growth, competitive positioning and financial strength. You can see the complete list of today’s Zacks #1 Rank stocks here.
View the Zacks #1 Rank List
Image: Shutterstock
TSM vs. MU: Which Semiconductor Stock Is the Better Buy Post-Earnings?
Key Takeaways
Despite delivering strong earnings and revenues that exceeded the Zacks Consensus Estimate, Taiwan Semiconductor Manufacturing (TSM - Free Report) , or TSMC, and Micron Technology (MU - Free Report) have pulled back. TSM and MU have dipped 7% and 15.2%, respectively, so far this month, potentially offering investors an opportunity to gain exposure to the booming AI semiconductor market at more attractive prices.
TSMC delivered third-quarter 2026 earnings of $4.60 per ADR, beating the Zacks Consensus Estimate by 3.4%, while revenues surged 41.2% year over year to $46.72 billion, surpassing estimates by 2.4%. Riding strong demand for advanced chips, particularly for AI applications, the company expects fourth-quarter revenues of $52.3 billion to $54.3 billion, signaling continued momentum into year-end.
Micron reported an impressive fiscal fourth-quarter 2026 performance, with adjusted EPS of $33.42 exceeding the Zacks Consensus Estimate by 5.73%. Revenues soared 379.3% year over year to $54.23 billion, beating estimates by 6.33%, as surging AI infrastructure investment fueled demand for memory products, including high-bandwidth memory (HBM).
Image Source: Zacks Investment Research
While both companies continue to benefit from substantial earnings growth and the expanding AI ecosystem, broader concerns about intensifying Chinese competition in the memory market, rising U.S. inflation and interest-rate expectations and the sustainability of AI infrastructure spending weigh on semiconductor stocks.
Against this backdrop, the recent pullbacks in TSMC and Micron raise an important question — could this dip present a timely buying opportunity and which semiconductor stock should investors prioritize? Let’s delve deeper.
Investment Case for TSM
TSMC is positioned to benefit from sustained AI infrastructure investment. In the third quarter, revenues surged 41.2% year over year, while EPS per ADR rose 57.5%, exceeding expectations. High-performance computing revenue rose 22% sequentially and accounted for 68% of total revenues, while advanced technologies contributed 79% of wafer revenues.
The outlook remains encouraging. TSMC expects fourth-quarter revenues of $52.3 billion to $54.3 billion, implying approximately 58% year-over-year growth at the midpoint. Its financial position is also robust, with $126 billion in cash and marketable securities at quarter-end and approximately $28.8 billion in quarterly operating cash flow.
However, gross margin declined sequentially from 67.7% to 66.4% as 2-nanometer production ramped up. Overseas fabrication facilities are another source of pressure, with management expecting their gross-margin impact to widen to 3–4 percentage points over the next few years.
Image Source: Zacks Investment Research
Investment Case for Micron
Micron’s fiscal fourth-quarter 2026 results were strong, showing the earnings potential of the AI-driven memory market. Revenues soared to $54.23 billion from $11.32 billion a year earlier, while adjusted EPS reached $33.42, up from $3.03. Core Data Center revenue climbed to $18 billion from $1.58 billion a year earlier, reflecting surging demand for memory to support AI infrastructure.
The company expects further acceleration in fiscal first-quarter 2027, forecasting revenues of $61.5 billion (+/- $1.5 billion) and adjusted EPS of $38.15 (+/- $1). This outlook indicates Micron’s opportunity to capitalize on demand for high-bandwidth memory, server DRAM and other data-center products. Liquidity is another strength. Micron generated $43.97 billion in operating cash flow during the fourth quarter and ended fiscal 2026 with $73.48 billion in cash, marketable investments and restricted cash.
However, the principal risks are the sustainability of exceptional memory pricing and earnings, the capital required to expand manufacturing capacity, and the cyclical nature of the memory industry. Micron’s forecast of continued growth is encouraging, but it needs to be analyzed whether demand and pricing can sustain such elevated profitability as supply expands.
Image Source: Zacks Investment Research
MU Looks Cheaper Than TSM, but Is Its Low Valuation Sustainable?
Image Source: Zacks Investment Research
TSMC trades at a forward 12-month P/E of 19.76, below its historical median of 21.14 and marginally above the Computer and Technology sector’s 18.86. Micron appears significantly cheaper at 4.97X forward earnings versus its historical median of 10.07 and the sector’s 18.86.
At present, MU offers greater valuation appeal following its recent pullback, while TSMC trades closer to its historical median. However, Micron’s unusually low multiple may reflect cyclical memory earnings and peak-profitability concerns.
Our Take
Both TSMC and Micron sport a Zacks Rank #1 (Strong Buy), reflecting favorable earnings estimate revisions following their strong quarterly results and upbeat outlooks. While MU appears more attractively valued based on its forward P/E, its earnings remain more exposed to memory pricing fluctuations and industry cyclicality.
If investors had to choose just one, TSMC gets a marginal edge for its strong position in advanced chip manufacturing, diversified exposure to AI-driven demand across high-performance computing and other end markets and more established earnings visibility. Although margin pressures from advanced-node ramp-ups and overseas expansion warrant monitoring, TSMC offers a balance of AI-driven growth, competitive positioning and financial strength. You can see the complete list of today’s Zacks #1 Rank stocks here.