analyst says: time to buy tsmc?
new york, Monday, 17 March 2025.
a leading us consulting firm is advising long-term investors to buy tsmc shares now. tsmc stands to profit considerably from massive ai infrastructure investments, with amazon, alphabet, and meta alone planning to spend over $240 billion this year. tsmc’s adr valuation is attractive. the firm highlights tsmc’s essential position in the semiconductor supply chain as key to this recommendation.
tsmc’s pivotal role in ai
TSMC’s prominent standing in the semiconductor industry makes it a prime beneficiary of increased expenditure on AI infrastructure [2][6]. As a leader in advanced chip manufacturing, TSMC is well-positioned to capitalize on the growing demand for high-performance computing and data center servers [2]. Major clients include Nvidia, AMD, Broadcom and Apple [2]. Amazon plans to invest $100 billion in AI, Alphabet around $75 billion, and Meta Platforms $65 billion this year [2]. An OpenAI-led group intends to invest $500 billion in U.S. data centers over the next few years [2].
financial performance and valuation
TSMC’s recent financial results show substantial growth [2]. Last quarter, revenue increased by 37% in USD and 39% in New Taiwan dollars (NTD) [2]. January 2025 revenue grew 36% (NTD), and February 2025 saw a 43% increase (NTD) [2]. Net profit in Q4 of last year increased by 57% (NTD) [2]. Despite strong growth and a positive outlook, TSMC’s stock valuation remains attractive [2]. The estimated price-to-earnings ratio for TSMC ADR is 19.5, with a price-to-earnings growth ratio of 0.7 [2].
manufacturing capacity and expansion
TSMC is actively expanding its manufacturing capabilities to meet rising demand [2]. The company plans to commence 2-nanometer chip production in 2026 [2]. TSMC is also increasing its investment in advanced packaging technologies [2]. These expansions include facilities in Arizona and Japan [2]. Furthermore, TSMC intends to increase its U.S. investment to $165 billion to construct six wafer fabs, two advanced packaging plants, and one R&D center [1]. This expansion underscores TSMC’s commitment to maintaining its leadership in semiconductor manufacturing [2].
geopolitical considerations and collaborations
Geopolitical factors and potential collaborations also influence TSMC’s strategic direction [3]. Arizona Governor Katie Hobbs is visiting Taiwan from March 16 to March 19, 2025, meeting with President Lai Ching-te and TSMC [1]. TSMC is reportedly considering a joint venture with NVIDIA, AMD, and Broadcom to operate Intel’s wafer fab [1]. However, analysts point out significant challenges to such a collaboration, including conflicts of interest and technology integration [3]. One analyst stated that the deal has a low chance of success [3].
expert analysis and market outlook
Market analysts view TSMC as a key player in the ongoing AI boom [2]. A lead analyst at TechInsights noted that TSMC’s ability to deliver cutting-edge chips is unmatched, making it a prime beneficiary [2]. Nvidia’s GTC 2025 event is expected to highlight new AI server chips and system solutions, with the B300 chip being a key focus [4]. The B300 is projected to begin trial production in the second quarter of 2025 and mass production in the third quarter [4]. These developments are expected to catalyze TSMC’s stock performance [4].