I’m Jumping Back Into Taiwan Semiconductor Again and I Won’t Stop This Time
TSMC keeps landing on my buy list quarter after quarter, and the more I study its financials the harder it gets to justify stopping. Here is why I keep adding to a position my friends think I already own enough…
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I added to my Taiwan Semiconductor (NYSE:TSM | TSM Price Prediction) position again this month, and I already know I will add again next quarter. Every filing this company releases gives me one more reason to keep buying.
My thesis comes down to one sentence. Every serious AI chip needs a factory, and TSMC runs the best factories on earth. The latest news made that case stronger. TSMC is increasing its 2nm wafer capacity as demand climbs, and 2nm wafers carry much higher prices. Higher volume at a premium price is exactly the kind of setup I want to own for decades. Management put it plainly on the July call: “The AI megatrend continues to drive the need for more and more computation, which supports the robust demand for leading-edge silicon.”
Growth That Keeps Speeding Up
Second-quarter revenue reached $40.20 billion, up 36.0% YoY. August revenue then grew 53.3% year-over-year, and management now expects full-year growth slightly above 40% in USD terms. 2nm debuted at 3% of wafer revenue in its first quarter of ramp, while advanced nodes already account for 77% of total wafer revenue. Gross margin hit 67.7%, and net income rose 77.41%. Pricing power shows up right there in the margins.
A Valuation That Still Rewards Buyers
TSMC trades at a forward P/E of 21 with a PEG ratio of 0.858. Analysts keep chasing the numbers higher. The 2027 EPS consensus stands at $21.9251, up from $19.6630 90 days ago, with nine upward revisions and zero downward over the past month.
Income That Grows Alongside the Business
For my retirement account, the dividend matters. TSMC declared TWD 7.00 per share for Q1 2026, up from TWD 6.00 for Q3 2025. The yield sits near 0.9%, and management reiterated an expectation for continued and increasing cash dividends per share in 2027. That is backed by a strong balance sheet: 2025 shareholders’ equity grew 27.33% while total liabilities grew just 4.39%, and cash reached $110 billion.
Why My Money Skips NVIDIA and Intel
The name most friends mention first is NVIDIA (NASDAQ:NVDA). The stock carries a forward P/E of 25 and yields about 0.12%. I get more income and a cheaper multiple with TSMC, and I own the supplier no matter which chip designer wins. High-performance computing already makes up 66% of revenue.
The foundry turnaround story is Intel (NASDAQ:INTC). Its trailing EPS stands at -$2.09, its forward P/E runs near 63, and it pays no dividend. I prefer to own the proven leader.
Real Risk I Track Every Quarter
The 2nm ramp costs money. Management expects it to dilute gross margin by about 3 to 4 percentage points in the second half, and overseas fabs add more drag. Capex climbed to $60-$64 billion this year, and currency swings between the dollar and the NT dollar hit reported results. Production concentrated in Taiwan remains a real exposure too.
I still keep buying. Even the low end of Q3 guidance, 65%, clears the long-term target of 56% and higher. Management also noted that “a higher level of capital expenditures is always correlated to higher growth opportunities in the following years.”
Next Nodes Already Lined Up Through 2029
A14 enters production in 2027, with volume in 2028 and A13 and A12 following in 2029. Management sees demand staying strong through 2029-2030. As long as the world’s most important chips run through TSMC’s fabs, my buy button stays switched on (we studied what the biggest tech winners looked like early and turned it into a free playbook you can grab here).
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Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
