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Disclosure: The author holds a long position in TSM.
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Summary
Scale leader for AI‑era compute capacity
Revenue and share rise with N2 and 3DFabric, but today’s premium already discounts much of the AI scarcity dividend. Upside skews to delivery, not re‑rating.
Analysis
Thesis
TSMC is the capacity and yield arbiter for AI/HPC compute. With N2/A16 leadership and integrated 3DFabric packaging, it captures a rising share of scarce advanced wafers—lifting revenue and durability—yet its trillion‑plus valuation compresses upside to disciplined execution rather than multiple expansion.
Last Economy Alignment
Owns the bottlenecks (advanced nodes, advanced packaging) that power AI; network scale and trust compound, though geopolitics and capex intensity temper a perfect score.
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Thesis Critique
Growth Outlook
Average Implied Multiple (to 2030)
1.9x (from 5 most recent analyses)
Reasoning
AI/HPC demand and packaging mix can lift revenue materially by 2030, but current scarcity and premium multiples already reflect much of this. Execution likely delivers steady EV accretion, not a step‑function re‑rate.
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Simplified Growth Explanation
Risk Assessment
Overall Risk Summary
Key risks: N2/A16 timing and yields; advanced packaging substrate/interposer supply; overseas fab cost gap; FX swings; customer concentration; policy whiplash. Balance sheet net cash and execution history mitigate technology risk.
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Tech Maturity Risk Score, Adoption Timing Risk Score, Moat Strength Risk Score, Capital Needs Risk Score, Regulatory Risk Score, Execution Risk Score, Concentration Risk Score, Unit Economics Risk Score, Valuation Risk Score, Macro Sensitivity Risk Score
Trends
Key Changes
- Q3’25 revenue hit $33.1B; Q4 guided $32.2–33.4B; full‑year growth ~mid‑30s%.
- N2 mass production timing reaffirmed for late 2025; A16 in 2026.
- Foundry share reached ~70% in 2Q’25; AI/HPC mix sustained.
- Capex narrowed to $40–42B for 2025; packaging investments rising.
- Overseas fab cost dilution persists but moderated vs prior guide.
Thesis update
No fundamental change: AI/HPC and 3DFabric still drive growth; updated with firmer 2025 prints and N2/A16 cadences.
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Future Considerations