Is It Wise to Invest in Taiwan Semiconductor's Shares Currently?
TSMC's AI-Driven Growth Fuels Revenue Increase
Taiwan Semiconductor Manufacturing Company (TSMC), the world's leading chip foundry, is experiencing a significant surge in revenue, thanks to its focus on AI-related technologies.
In May 2025, TSMC reported a revenue of $10.85 billion, marking a 40% increase from the previous year. This growth is expected to continue, with the company forecasting an overall revenue growth of around 30% for the full year 2025.
A key driver behind this growth is the demand for AI chips, particularly those produced with advanced nodes below 7nm such as 3nm and 5nm technologies. In 2024, AI-related segments already accounted for about 15% of TSMC's revenue, a figure the company projects to double in 2025.
Advanced packaging technologies that enhance AI chip performance and thermal management are significant contributors to this growth. TSMC's revenue in AI-related segments benefits not just from hardware sales for compute-intensive chips but also from government initiatives and growing AI infrastructure investments, including Taiwanese and US hyperscalers expanding their AI data centers.
Looking ahead, TSMC is preparing for strong growth through to the end of this decade and beyond. The company is expanding in emerging fields like quantum and neuromorphic computing as well as diverse applications such as healthcare and space exploration. By 2030, substantial gains in stock price tied to revenue growth are anticipated, with an EPS forecast rising from $9.52 in 2025 to $22.14 in 2030 and a stock price potentially reaching around $398.52.
TSMC's stock is trading about 5% below its all-time high and is up about 8% so far in 2025 as of Tuesday's market close. With a trailing price-to-earnings ratio of around 28 and a forward P/E of just 23, TSMC's stock can be considered a bargain compared to its competitive moat in the market.
TSMC's additional expansion will help maintain its position as the world's leading chip foundry. The company recently announced an investment of $100 billion in the US, aimed at building three new fabrication plants, two packaging facilities, and a research and design center. TSMC works with multiple companies in the AI and tech industry, including Nvidia, which has approximately 90% of the market share for graphic processing units (GPUs) necessary for large language models and generative AI programs.
The global generative AI market is expected to be $67 billion this year, increasing to $442 billion by 2031, with a dynamic compound annual growth rate (CAGR) of 37%. TSMC is involved in roughly 85% of global semiconductor start-up product prototypes, positioning it well to capitalise on this growing market. The company is forecasting a 45% CAGR for revenue in its AI-related businesses over the next five years.
In summary, TSMC’s AI-related revenues are rapidly growing, expected to double their share from 15% in 2024 to around 30% in 2025, and this AI-driven growth supports an overall revenue increase forecast of about 30% for 2025. Over the next five years, this trend is expected to continue, with AI substantially shaping TSMC’s revenue growth trajectory through advanced chip technologies and strategic new markets.
[1] [2] [3] [4] (Sources)
- TSMC's focus on AI-related technologies, such as the production of AI chips with advanced nodes, is driving significant growth in finance, with the company forecasting a 30% overall revenue increase for 2025.
- The surge in TSMC's revenue is not just due to the sale of hardware for compute-intensive chips, but also from government initiatives and investments in data-and-cloud-computing and technology, like AI infrastructure in Taiwanese and US hyperscalers.
- In addition to its current investments, TSMC is planning to expand in emerging fields like quantum and neuromorphic computing, and diverse applications such as healthcare and space exploration, which are expected to contribute to its revenue growth in the future.
- The generative AI market, which TSMC is well positioned to capitalize on, is projected to reach $442 billion by 2031, with a CAGR of 37%, providing a potential avenue for continued investing in TSMC's stock market.
