New: Introducing the Finviz Crypto Map

Learn More

3 Reasons to Buy TSMC Stock Besides 61% Q2 Profit Surge

By Tirthankar Chakraborty | July 18, 2025, 3:00 PM

Taiwan Semiconductor Manufacturing Company Limited TSM, or TSMC, recently reported a record surge in second-quarter profit as it continues to benefit from the artificial intelligence (AI) megatrend. TSMC is also expected to grow further for three main reasons. Let’s examine those reasons and what makes TSMC stock a compelling buy now. 

TSMC’s Positive Q2 Results & Outlook Boosts Share Price 

On Thursday, TSMC reported that its net income surged 60.7% year over year to NT$398.27 billion in the second quarter, a record high and significantly higher than estimates. TSMC’s revenues for the June quarter came in at NT$933.80 billion, up 38.7% year on year, and above projections. 

TSMC’s second-quarter sales rose as demand for AI chips remained strong. The company’s high-performance computing division, which includes AI and 5G applications, accounted for 60% of the second-quarter revenues. Strong demand for TSMC’s progressive 3nm and 5nm node semiconductor chips also contributed to revenue growth.  

Banking on the growing demand for TSMC’s advanced processors for clients, including NVIDIA Corporation NVDA and Apple Inc. AAPL, the company projected third-quarter revenues between $31.8 billion and $33.0 billion, up 38% year over year. For 2025, TSMC expects revenues to surge nearly 30% when measured in U.S. dollar terms.  

After the recent positive quarterly results and an optimistic forecast, TSMC stock popped. TSMC’s shares have outperformed the Semiconductor - Circuit Foundry industry year to date (+24.2% vs. 20.3%). 

Zacks Investment Research

Image Source: Zacks Investment Research

3 More Reasons to Be Bullish on TSMC Stock  

TSMC holds a leading position in the semiconductor industry. It controls nearly 67% of semiconductor manufacturing, giving it significant pricing power. Being the first to introduce the third-party foundry model also grants TSMC dominance in the chip foundry sector. Regarding dominance, all major players in the industry, such as NVIDIA, Advanced Micro Devices, Inc. AMD, and Broadcom Inc. AVGO, are the key customers of TSMC. Conversely, TSMC’s competitor, Intel Corporation INTC, has faced recent difficulties.  

TSMC also faces headwinds from President Donald Trump’s tariffs. Taiwan is subject to 32% tariffs, with Trump warning of further tariffs on semiconductors. U.S. export controls also restrict TSMC’s business with China. However, recently, NVIDIA and AMD received assurance from the U.S. government to ship products to China, which is a positive development for TSMC as well. Additionally, TSMC is expanding beyond Taiwan, with plans to establish manufacturing plants in Japan, Germany and the United States soon.  

Manufacturing a semiconductor plant is not easy; it involves a complex and cumbersome process. The technology is not only intricate but also requires significant capital investment. As a result, many advanced companies have chosen not to build their facilities and instead rely on TSMC. This high barrier to entry has helped TSMC keep potential rivals at bay. 

TSMC Stock to Buy Hand Over Fist 

While encouraging second-quarter results boosted TSMC’s stock price, the company is primed for growth in the years ahead due to its competitive advantages, expansion efforts and significant barriers to entry in the semiconductor industry, where it already holds a dominant position. 

Brokers are also optimistic about the company’s prospects. They predict TSMC stock’s average short-term price target at $244.75, reflecting a 3% increase from the last closing price of $237.56. The highest target stands at $270, suggesting a potential upside of 13.7%. 

Zacks Investment Research

Image Source: Zacks Investment Research

Additionally, the $9.54 Zacks Consensus Estimate for TSMC’s earnings per share has increased 15.5% annually. TSMC, therefore, rightfully holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here. 

Zacks Investment Research

Image Source: Zacks Investment Research

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report


 
Intel Corporation (INTC): Free Stock Analysis Report
 
Apple Inc. (AAPL): Free Stock Analysis Report
 
Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
 
NVIDIA Corporation (NVDA): Free Stock Analysis Report
 
Broadcom Inc. (AVGO): Free Stock Analysis Report
 
Taiwan Semiconductor Manufacturing Company Ltd. (TSM): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Latest News

14 min
15 min
18 min
19 min
23 min
33 min
36 min
44 min
44 min
46 min
55 min
57 min
57 min
1 hour
1 hour