TSMC’s stock price hit a record high recently. (File photo, European News Agency)
[Financial Channel/Comprehensive Report] Taiwan Semiconductor Manufacturing Company (TSMC) has benefited from the continued rise in demand for AI chips, and its stock price has risen by about 50% this year. On October 6, the Taiwanese stock market reached a new high of 2,590 yuan in intraday trading. However, as the stock price has risen sharply, investors have also begun to worry about whether the valuation is too high. Is it too late to enter the market now? Foreign media "The Motley Fool" analyzed that TSMC's AI business still has growth momentum, and the estimated price-to-earnings ratio is only slightly higher than the S&P 500 index average. The long-term investment value is still worthy of attention.
Reports indicate that TSMC is the leader in the global foundry industry, with a market share of approximately 70%. Many of the world's top technology companies rely on TSMC to produce chips. With the rapid development of AI technology, companies continue to invest large amounts of money to build related equipment and computing infrastructure, driving the growth in demand for AI chips and making TSMC an important beneficiary of this wave of technology investment boom.
TSMC is expected to release its latest full quarter earnings on Thursday. Market expectations are that driven by continued demand for AI, TSMC is expected to hit a new profit high for the sixth consecutive quarter, with profit forecast to grow 65% to US$23.4 billion.
Recent data released by TSMC also shows that so far in 2026, revenue has grown by more than 40%. As major companies continue to increase related investments in order to stay ahead in the AI competition, technology spending remains high, and the market remains relatively optimistic about TSMC's operating prospects.
At present, the demand for AI chips has not shown any obvious signs of slowing down. As long as the technology industry continues to invest in AI development, TSMC will have the opportunity to continue to benefit and provide growth momentum for revenue and profits.
Although TSMC’s stock price has risen sharply this year, foreign media analysts believe that from a valuation perspective, TSMC may not be so expensive that it loses investment appeal.
According to analyst estimates, TSMC's current estimated price-to-earnings ratio is about 21 times, which is only slightly higher than the S&P 500 average of about 20 times. For a company with strong growth momentum and a dominant position in the industry, it is not unreasonable for the market to give a certain valuation premium.
In other words, to judge whether TSMC's stock price is too high, you can't just look at how much the stock price has risen. You must also consider whether the company's future profit growth can support the current valuation. If AI demand continues to be strong, TSMC's profits still have room to grow, and the stock price may have opportunities for further performance.
On the other hand, although the United States has actively promoted local chip manufacturing in recent years in the hope of reducing its dependence on overseas supply chains, TSMC still has considerable advantages in semiconductor manufacturing technology, mass production experience, and cost control. It will not be easy for other companies to catch up in a short period of time.
These advantages will help TSMC maintain an important market position in the next few years and continue to accept the order demand brought by AI-related investments. As long as TSMC can continue to maintain its technological leadership and grasp customer needs, it will have the opportunity to continue to play a key role in the growth of the AI industry.
