TSM Stock Hits 52-Week High: Is It Time to Book Profits or Buy More?

Taiwan Semiconductor Manufacturing Company TSM, also known as TSMC, shares hit a 52-week high of $233.82 on July 2 and finally closed at $233.60, rising 18.2% year to date (YTD). This performance easily beats the broader Zacks Computer and Technology sector, which rose 5.6% in the same period.

Taiwan Semiconductor stock has also outpaced several chip peers, including NVIDIA NVDA, Advanced Micro Devices AMD and Intel INTC. Shares of NVIDIA, Advanced Micro Devices and Intel have risen 17%, 14.6% and 9.1%, respectively, YTD.

This outperformance shows investors are becoming increasingly confident in Taiwan Semiconductor’s long-term story, even during a volatile market shaped by trade conflicts and geopolitical risks. We believe this momentum is grounded in strong fundamentals, and TSM’s long-term outlook justifies a buy position for now.

YTD Price Return Performance

AI Chip Explosion Keeps TSMC in the Lead

Taiwan Semiconductor sits at the center of the artificial intelligence (AI) revolution. As the world’s largest contract chipmaker, TSMC supplies cutting-edge chips to companies like NVIDIA, Advanced Micro Devices, and Intel, all of which depend on TSMC’s ability to manufacture at advanced nodes.

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. The company expects AI-related sales to double again in 2025, with an impressive 40% compound annual growth rate over the next five years. This positions TSMC as the undisputed backbone of AI-driven technological advancements.

The company kicked off 2025 with excellent first-quarter results. Revenues surged 35% year over year to $25.53 billion, and net income rose 53% to nearly $11 billion in the first quarter. This growth was powered by the booming demand for its advanced 3nm and 5nm nodes, which now account for 58% of total wafer sales.

Taiwan Semiconductor’s first-quarter EPS also jumped 53.6% to $2.12 and surpassed the Zacks Consensus Estimate of $2.03. The stock beat the consensus mark for earnings in each of the trailing four quarters, the average surprise being 6.9%.

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

Taiwan Semiconductor is not only growing but also scaling at an unprecedented pace to capitalize on the AI-driven growing demand for advanced chips. The company is set to invest between $38 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 TSM stays ahead of the curve.

Taiwan Semiconductor’s sustained focus on investing in growth opportunities is likely to continue boosting its top and bottom lines. The Zacks Consensus Estimate for 2025 and 2026 revenues indicates year-over-year growth of 29.8% and 17.3%, respectively. The consensus mark for 2025 and 2026 EPS implies a rise of 31.8% and 15.8%, respectively.

TSM Valuation Offers Growth at a Discount

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 23.32X, which is lower than the sector average of 26.7. This discount adds to the appeal for long-term investors.

Taiwan Semiconductor also trades at a lower P/E ratio than other semiconductor players, including Intel, NVIDIA and Advanced Micro Devices. At present, Intel, NVIDIA and Advanced Micro Devices trade at P/E multiples of 42.73X, 32.71X and 28.98X, respectively.

Given its superior scale and exposure to AI growth, TSM’s relative valuation strengthens the case for adding the stock to the portfolio.

Final Thoughts: Buy TSM Stock for Now

Taiwan Semiconductor remains a critical player in global chipmaking. Its dominance in advanced nodes, rising AI-related demand and aggressive investment in capacity position it well for the next decade. With strong earnings momentum and a valuation that still offers upside, now is the perfect time to buy more.

Taiwan Semiconductor currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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