TSMC Earnings Surge Raises a Key Buying Question

Taiwan Semiconductor Manufacturing Company (TSMC) reported stronger-than-expected fourth-quarter results, reinforcing its central role in the global AI supply chain. According to Barchart, TSMC posted record quarterly revenue of NT$1.046 trillion, with profits rising 35% year over year, driving its stock higher following the earnings release.

Management cited continued strength in artificial intelligence demand, with AI-related revenue expected to grow around 40% in the current quarter. As the worlds largest contract chipmaker, TSMC remains critical to advanced chip production for major clients such as Nvidia and Broadcom, underpinning confidence that the AI boom remains a multi-year trend.

However, valuation concerns have emerged after the rally. TSMC now trades at roughly 34 times trailing earnings, with shares up more than 140% from their 52-week low, pushing technical indicators into overbought territory. While this raises the risk of short-term pullbacks, many analysts argue that sustained AI-driven earnings growth could justify current levels.

According to Barchart, Wall Street maintains a “Strong Buy” consensus on TSMC, with some price targets implying further upside. Supporters point to TSMCs technological leadership, expansion into 2-nanometer production, and large-scale capital investments, including plans to invest up to $100 billion in the U.S.

Overall, the earnings report reinforces TSMCs long-term fundamentals, but investors face a key question: buy into strength driven by AI growth, or wait for a valuation reset amid near-term volatility.