I’m Loading Up on Taiwan Semiconductor Ahead of Oct. 15 Earnings
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
I added to my Taiwan Semiconductor Manufacturing (NYSE:TSM | TSM Price Prediction) position again this week, and I expect to add more before the company reports before the market opens on October 15. Each time I rebalance, I land on the same name. Almost every AI chip I read about gets made in TSMC’s fabs, and I want to own those fabs.
Why I Keep Coming Back to the Buy Button
TSMC makes the chips that the rest of the industry designs. Management stated: “The fundamental thing is semiconductor chips, and most of them in TSMC.” High-performance computing made up 66% of second-quarter revenue and rose 20% quarter over quarter. Owning the picks and shovels for a decade-long expansion means I don’t need to guess which AI company comes out on top.
Three Reasons I Keep Adding
Growth is still speeding up. Second-quarter revenue reached $40.20 billion, up 36.0% from a year earlier. August revenue rose 53.3% year over year. Management now expects full-year growth of slightly above 40% in U.S. dollars, well ahead of its long-term target of a growth rate approaching 25%.
Margins show real pricing power. Gross margin hit 67.7%, up 9.1 percentage points from a year ago. EPS of $4.31 beat the $3.89 consensus. The company held 110 billion US dollars in cash and marketable securities at the end of the quarter.
Earnings estimates keep rising. At $472.87, the stock trades at about 28 times the 2026 consensus EPS of $16.9339. On 2027 estimates of $21.9251, it trades at about 22 times. Over the past 30 days, analysts raised their 2026 estimates 9 times and cut them 0 times. The dividend: NT$7.00, payable Oct 8, up from NT$6.00.
Why My Money Goes Here Instead of NVIDIA or Intel
The stock NVIDIA (NASDAQ:NVDA) trades at 47 times trailing earnings. Its filings name reliance on third parties (TSMC) for manufacturing as a risk. The supplier NVIDIA depends on offers a lower multiple and better value.
Intel (NASDAQ:INTC) is the other foundry option. Intel Foundry brought in $5.765 billion last quarter and still posted a $2.1 billion quarterly loss. Intel’s trailing gross margin sits near 34.8%. TSMC makes about double that margin on its revenue.
Risks That Could Hurt This Position
Taiwan is the primary risk. European auditors describe cross-strait tensions as “a source of persistent insecurity for the sector.” Margins will decline as the 2nm ramp cuts gross margin by about 3 to 4 percentage points. A handful of large AI customers also drive a big share of demand.
None of this has changed my thesis. TSMC has committed $265 billion to Arizona and is building fabs in Japan and Germany. Even with the 2nm drag, third-quarter margin guidance of 65%–67% sits well above the 56%+ long-term target. I also expect volatility around earnings. After TSMC’s last two earnings beats, the stock still fell an average of 3.61% the next day. I own it for the long run, so moves like that don’t change my plans.
What Keeps My Buy Button Active
TSMC raised its 2026 capital budget to US$60 billion to US$64 billion. Its A14 node begins volume production in 2028. Management expects strong demand from 2026 through 2029 and 2030. On Oct. 15, I’ll compare results with the $4.4614 EPS consensus and listen for any change in that outlook. Unless something changes, I’ll keep adding to the company that makes the AI industry’s chips.
Contact [email protected] for any questions or corrections.
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.
