TSM Stock Recent News

The valuation is stretched, risks are increasing, and margins are declining.

There are numerous stocks capitalizing on several growth trends currently, with one of the most significant being artificial intelligence (AI). Not every stock is a smart buy right now, but there is one that stands out above the rest as potentially the smartest stock pick.

TSMC delivered a strong 2Q FY2025 beat and raised its full-year revenue outlook, driven by robust AI demand and resilient economy. Management hasn't seen any major changes in customer behavior or signs of demand being pulled forward from 2H 2025 due to tariff concerns. Margins are expected to decline more sharply in 3Q FY2025, with a wider margin outlook beyond 2025.

My high-conviction bullish view on Taiwan Semiconductor Manufacturing Company Limited aka TSMC has reaped great rewards. But after Q2 FY25 results, I am not as enthusiastic now. TSMC is seeing red-hot demand driven by high-performance computing needs, but due to capacity constraints, we can't expect commensurate growth. Usually, high demand and limited capacity leads to margin improvements via higher pricing. But not in this case as overseas fabs and a strong FX headwind may offset pricing gains.

EWT remains a buy due to strong momentum, attractive valuation, and a technical breakout above key resistance. The ETF's performance is heavily tied to Taiwan Semiconductor, which now makes up over 24% of the fund and benefits from the AI rally. EWT offers a high dividend yield, growing assets, and robust liquidity, but investors should note its elevated risk and sector concentration.

Taiwan Semiconductor Manufacturing Company Limited's fundamentals remain strong and valuation remains reasonable despite recent price rallies. But consensus earnings estimates seem overly optimistic given macro and geopolitical uncertainties reflected in ASML's recent earnings report. Implied volatility for TSM options is at a 52-week low.

Although the artificial intelligence (AI) arms race has been underway since the start of 2023, there is no shortage of stocks that remain excellent investments at present. We're far from reaping the benefits of the rise of AI across the entire economy, and significant infrastructure still needs to be built out.

TSMC delivered strong Q2 results with accelerating revenue growth, improved profitability, and raised full-year guidance, highlighting robust demand for AI and HPC chips. Expansion in the US, especially the Arizona fab ramp-up and advanced technology leadership with 2nm, secures TSMC's dominance and future growth potential. Despite tariff concerns, customer demand remains strong, and US expansion will help offset some long-term impacts, supporting continued profitability.

One of the longer-term booms in the stock market right now is right at the center of the technology sector, as the space is responsible for most of the returns now in the S&P 500 and Nasdaq-100 indexes. This feature is likely to continue into the future, considering how relatively early it is in the artificial intelligence race not only in the United States but worldwide.

Jinx! Last week, according to Bloomberg, the official market capitalization of Taiwan Semiconductor Manufacturing Company (TSM -1.84%) stock traded on the Taiwanese stock market reached $1 trillion.