Investors now value Taiwan Semiconductor Manufacturing Co. as a core supplier of AI infrastructure rather than a cyclical foundry. At recent levels implying roughly a 32-times trailing P/E and mid-teens forward P/E, the stock pricing reflects expectations of 20–25% annual revenue growth, near-50% net margins and sustained dominance in advanced nodes. This revaluation rests on the assumption that the AI super-cycle will drive high-30s revenue CAGR through 2029, with minimal downside from typical semiconductor cyclicality.

For the December quarter, TSMC reported revenue of approximately TWD 1.05 trillion, up 20.5% year-on-year, and net income of TWD 505.7 billion, a 40.6% increase that lifted net margin to 48.4%. EPS rose nearly 35% to TWD 19.50, while EBITDA climbed 23.5% to TWD 733.2 billion. Free cash flow remained strong at TWD 223.1 billion despite TWD 365.9 billion in capital expenditures, and net cash increased by TWD 297.1 billion. The balance sheet boasts TWD 3.07 trillion in cash and short-term investments against TWD 2.47 trillion in liabilities, underpinning the company’s ability to fund its USD 52–56 billion annual capex program without stressing liquidity.

TSMC’s 77% revenue exposure to N7 and below highlights its leadership in advanced lithography: N3 accounts for 28% of sales and is scaling capacity toward 180k wafers/month in 2026, while N2 capacity could expand from 35k wafers/month in 2025 to over 130k in 2026. Next-generation A16 is positioned for high-performance compute clients. Advanced packaging via CoWoS is set to climb from 75k wafers/month to 120k in 2026, with emerging CoWoP and CoPoS technologies further strengthening the turnkey offering. This integrated node-plus-packaging franchise drives TSMC’s pricing power and supports ASP uplifts of ~20% annually without margin compression.