In partnership with

Future Download

A.I., Crypto & Tech Stocks

AI Revolution Fuels Taiwan Semiconductor: A Must-Have Stock for AI Enthusiasts

For those captivated by the artificial intelligence (AI) boom, Taiwan Semiconductor Manufacturing Company (TSMC) is a prime investment opportunity.

Morgan Stanley has reaffirmed TSMC as its top stock pick, driven by robust AI capital spending from tech giants like Meta and Microsoft.

Despite a 12% year-to-date drop in TSMC’s Taiwan-traded shares and a 13% decline in its U.S.-listed American Depositary Receipt (TSM), analysts see significant upside, fueled by AI’s unstoppable momentum.

Morgan Stanley analyst Charlie Chan, with an overweight rating on TSMC, sets a price target of NT$1,288.00, implying a 42% surge from the April 30 close of NT$908.00.

Chan’s optimism stems from the resolution of three prior concerns that held back TSMC’s stock during recent market volatility.

First, doubts about sustained AI demand have been quelled by Meta and Microsoft’s strong AI investment guidance, signaling a thriving market for TSMC’s advanced chips, critical for AI applications.

Second, speculation about a TSMC-Intel joint venture has been dismissed. Chan notes that such a partnership would have conflicted with TSMC’s customer base and offered little shareholder value, as Intel’s technology operates independently. This clarity strengthens TSMC’s strategic focus on its core foundry business, serving AI leaders without entanglement.

Finally, fears over U.S. tariffs on semiconductors, expected post-May 7, 2025, have eased.

Chan believes TSMC’s $165 billion U.S. investment could secure tariff exemptions. Even if tariffs apply, TSMC has indicated that costs will be passed to customers, preserving profitability. This resilience underscores TSMC’s dominance in producing cutting-edge chips for AI workloads.

For AI enthusiasts, TSMC is more than a semiconductor giant—it’s the backbone of the AI revolution. With its stock poised for a rebound and analyst confidence soaring, TSMC offers a compelling way to ride the AI wave.

Market Leadership and AI-Driven Growth

TSMC’s foundry market share reached 67% in Q4 2024, up from 61% earlier in the year, driven by surging demand for AI and high-performance computing (HPC) chips.

Its Q1 2025 revenue soared 41.6% year-over-year to NT$839.25 billion ($25.53 billion), with net profit jumping 60.3% to NT$361.56 billion, exceeding expectations.

HPC, including AI applications, accounted for 59% of revenue, up 7% from the prior quarter. TSMC forecasts 2025 revenue growth of approximately 20%, with AI accelerator revenue expected to double, approaching a mid-40% CAGR through 2029.

What Financials Say

In 2024, TSMC’s full-year revenue hit NT$2.9 trillion ($88 billion), a record since its 1994 IPO, with a 38.8% Q4 increase to NT$868.46 billion ($26.36 billion).

Gross margin held steady at 58.8% in Q1 2025, reflecting premium pricing for advanced nodes (7nm and below), which comprised 73% of wafer sales.

Net profit margin remains among the industry’s highest at 40%, compared to a 14% average.

Capital expenditure for 2025 is projected at $38–$42 billion, up 41% from 2024’s $30 billion, to support global fab expansions and 2nm production. Despite high capex, TSMC’s fortress balance sheet, with AA-/Aa3 credit ratings, relies solely on internal funds.

Why TSMC Remains the Cornerstone for AI Investors

Taiwan Semiconductor Manufacturing Company (TSMC) continues to solidify its position as the world’s leading chip foundry, powering the AI revolution with unmatched technological prowess.

Despite geopolitical headwinds and tariff concerns, TSMC’s financial strength, market dominance, and strategic expansions make it a compelling investment for those betting on AI’s future.

With clients like Nvidia, Apple, AMD, and Qualcomm relying on its cutting-edge chips, TSMC is a linchpin in the global tech ecosystem.

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.