Taiwan Semiconductor (TSM) Stock: Why TSMC Looks Cheap at Current Prices

TLDR

• Taiwan Semiconductor reported 26% revenue growth in Q4 and expects 30% growth in 2026
• TSMC projects 25% compound annual growth rate from 2024 through 2029
• The stock trades at 24 times forward earnings, below the 30x multiple of big tech peers
• TSMC is investing $165 billion in Phoenix manufacturing facilities
• Taiwan agreed to invest $250 billion in US semiconductor production as part of trade deal

Taiwan Semiconductor Manufacturing delivered strong fourth-quarter results and outlined an aggressive expansion plan. The company’s guidance suggests the AI chip boom shows no signs of slowing.

Taiwan Semiconductor Manufacturing Company Limited, TSM

The world’s largest chip foundry reported 26% year-over-year revenue growth in Q4. More impressively, management expects revenue to jump 30% in 2026. That’s serious growth for a company with a $1.7 trillion market cap.

The numbers get even better when you look beyond next year. TSMC now forecasts a 25% compound annual growth rate through 2029. That five-year outlook reflects sustained demand across the chip industry.

The company sits at the center of AI hardware production. Nearly every major tech company building AI systems relies on TSMC chips. Nvidia and Apple both count TSMC as a key supplier for their logic chips.

Valuation Gap Creates Opportunity

Despite the impressive growth trajectory, TSMC trades at just 24 times forward earnings. Most large tech companies command valuations around 30 times forward earnings. None of those companies project 30% revenue growth this year.

The S&P 500 trades at 22.3 times forward earnings. TSMC sits slightly above that benchmark but delivers growth rates the broader market can’t match.

The stock climbed more than 50% in 2025. But the valuation suggests investors haven’t fully priced in the company’s dominant position. The disconnect between growth rate and price multiple stands out.

US Expansion Plans Take Shape

TSMC is pouring $165 billion into Phoenix manufacturing facilities. The investment represents one of the largest foreign direct investments in US history.

Taiwan President Lai Ching-te met with Arizona Senator Ruben Gallego to discuss expanding semiconductor operations. Lai expressed interest in adding more manufacturing and research facilities in the Phoenix area.

The conversation came after Taiwan and the US reached a new trade agreement. Under the deal, US tariffs on Taiwan exports drop from 20% to 15%. Taiwan committed to $250 billion in semiconductor, energy, and AI production investments on US soil.

Taiwan also guaranteed $250 billion in credit to support additional investment. Gallego called the current level of Taiwanese investment in Arizona impressive. He said other states envy Arizona’s position.

The Arizona facilities will produce advanced chips needed for AI applications. President Donald Trump has pushed major chipmakers to expand US operations. The focus is particularly on chips powering artificial intelligence systems.

TSMC’s Phoenix investment creates thousands of manufacturing jobs. The facilities will produce some of the most advanced chips in the world. Construction on multiple manufacturing plants is already underway.

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