TSMC. (Bloomberg file photo)
[Financial Channel/Comprehensive Report] A foreign media report titled "TSMC once again proved itself to be a top AI investment target" pointed out that for investors who have long-term focus on the field of artificial intelligence (AI), TSMC (2330) has always been an investment target worthy of attention. TSMC recently announced its latest quarterly financial report, once again delivering impressive results. It is currently one of the most worth-buying AI concept stocks, and it still has growth potential in the future. If profits in 2027 meet expectations, the stock price may even rise again.
The American investment media "The Motley Fool" pointed out that although TSMC's stock price did not perform as expected after announcing its financial report, the market's outlook for the future may be the key to affecting the stock price; as AI infrastructure continues to expand, TSMC is still an AI investment target worthy of attention, and may even experience further gains next year.
The article also pointed out that in its financial report, TSMC once again demonstrated strong corporate strength and released an optimistic outlook on future prospects. It should be one of the most worth buying AI concept stocks at present. It said that if you have not yet held TSMC stocks, now may be a time to consider entering the market.
TSMC is a giant in the global semiconductor industry. When people talk about companies like NVIDIA or Apple having their own chips, that's not entirely wrong because those companies do design their own chips. However, the actual chip manufacturing work is usually entrusted to companies such as TSMC for OEM production.
TSMC is the world's largest wafer foundry, undertaking a large number of chip manufacturing orders from Huida, Apple and many other companies. This has allowed TSMC to participate in the growth of multiple areas of the technology industry, which is currently booming driven by the continued expansion of large-scale AI infrastructure.
Currently, the biggest driver of TSMC’s growth comes from its AI business. TSMC has previously estimated that the compound annual growth rate (CAGR) of AI-related chip revenue will reach 50% from 2024 to 2029.
During TSMC’s third-quarter earnings conference call, an analyst asked the company whether it would update its outlook in response to this forecast. TSMC President Wei Zhejia said: "What I can say now is that demand is very, very strong, okay? We don't see any signs of slowing down. Whether the annual compound growth rate is higher than 50% or whatever, the final growth rate is likely to be higher."
Reports suggest that TSMC is facing strong demand for rapid expansion. Wei Zhejia's statement also shows that TSMC's previous growth forecast may be too conservative, which is undoubtedly good news for shareholders.
Strong AI demand is also reflected in TSMC’s third-quarter financial report. According to published revenue data, TSMC’s third-quarter consolidated revenue was NT$1.49424 billion, a quarterly increase of 17.6%, an annual increase of 50.9%, a gross profit margin of 66.4%, a quarterly decrease of 1.3 percentage points, an annual increase of 6.9 percentage points, and a operating profit margin of 58.7%. , a quarterly decrease of 1.6 percentage points and an annual increase of 8.1 percentage points. The net profit rate was 51.1%, a quarterly decrease of 4.5 percentage points and an annual increase of 5.4 percentage points. The after-tax earnings were 763.06 billion yuan, a quarterly increase of 8% and an annual increase of 68.7%. The after-tax earnings per share were 29.43 yuan.
TSMC's cumulative revenue in the first three quarters was NT$3.898727 billion, with a gross profit margin of 66.8%, an annual increase of 7.8 percentage points, and a operating profit rate of 59%, an annual increase of 9.4 percentage points. After-tax earnings were NT$242.106 billion, an annual increase of 68.5%, and after-tax earnings per share were NT$78.75.
The report stated that this is a very impressive achievement for any company. With the AI construction boom showing no signs of slowing down, TSMC has once again demonstrated its strong corporate strength. However, the next question is: "Is it still a good choice to buy TSMC stock now?"
The report pointed out that as 2027 approaches, it is reasonable for investors to begin to evaluate the value of stocks based on the estimated profits in 2027. Based on this calculation, TSMC's current stock price is about 18 times its estimated earnings per share in 2027; if calculated based on the profits in the past 12 months, the price-to-earnings ratio is about 27 times.
The article further speculates that assuming TSMC's 2027 profit reaches the level expected by analysts and the price-to-earnings ratio remains at 27 times, the stock price will have a chance to rise by about 50% next year. However, this increase is calculated based on profit expectations and valuation assumptions. It is not TSMC’s official target price, nor does it mean that the stock price will inevitably reach this level.
Looking forward to the market outlook, "The Motley Fool" believes that if the AI infrastructure construction boom remains strong from 2028 to 2029, TSMC's stock price prospects are still worth looking forward to. As the AI industry continues to develop, TSMC, with its dominant position in chip manufacturing, is expected to continue to benefit from the growth in related demand. At the end of the article, TSMC is still considered a stock worth buying.
