Key Takeaways
- Quality scores 94/100 on a 60.3% second-quarter operating margin, a 49.9% net margin, 40.0% return on equity and debt of just 0.17 times equity.
- Growth scores 78/100: second-quarter revenue rose 36.0% and EPS 77.4%, and third-quarter revenue reported on October 8 was up about 51%.
- Opportunity scores 37/100 at $453.31, in the upper end of the two-year range, but Yahoo’s 5.18 EV/EBITDA looks understated, and on a rebuilt figure of about 23 the model would rate the stock a Hold rather than a Buy.
Taiwan Semiconductor Manufacturing (TSMC), the contract chipmaker behind most of the world’s advanced processors, reported on October 8 that third-quarter revenue reached NT$1.494 trillion, about 51% more than in the same quarter of 2025 and its highest for any quarter. Its US-listed shares still closed at $453.31 on Friday, October 9, down for a fourth straight session and 6.7% below Monday’s close of $485.80. This Taiwan Semiconductor Manufacturing stock analysis, based on Yahoo Finance data as of October 11, 2026, explains why the scoring model rates the stock a Buy ahead of third-quarter results on October 15, and why that signal depends on figures that look distorted.
What Is Happening With the Stock Price
At $453.31, TSMC trades in the upper end of its two-year range of $146.80 to $472.78 on weekly closes, about 4% below the high and more than three times the low. Daily closes show a wider range, from $141.37 in April 2025 to the $485.80 reached on Monday, October 5. The shares are up 49.2% this year from $303.89 at the end of 2025. The pullback followed comments by Elon Musk on October 7 that Tesla and SpaceX, rather than TSMC, would build and run the planned Terafab chip complex in Texas, according to Investing.com, and published reports also pointed to positioning ahead of earnings. September revenue of NT$511.86 billion was 0.6% below August but 54.6% above a year earlier, and published reports said the quarter beat the top of TSMC’s US$44.6 billion to US$45.8 billion guidance.
Quality: Is This a Financially Sound Business?
Quality scores 94/100, a near-top reading. The gross margin is 64.2% on a trailing basis, the 60.3% operating margin is the second-quarter figure, and the net margin is 49.9%. Return on equity of 40.0% and return on assets of 19.0% are exceptional for a capital-intensive manufacturer, and the balance sheet is conservative, with debt at 0.17 times equity, a current ratio of 2.46 and a quick ratio of 2.13.
Cash flow is the one area where this Taiwan Semiconductor Manufacturing stock analysis needs a caveat. Yahoo puts trailing free cash flow at $22.9 billion, while Yahoo’s cash flow data show NT$2.63 trillion of operating cash flow less NT$1.51 trillion of capital spending over the four quarters to June, about NT$1.12 trillion, or roughly $35 billion. On either measure, building leading-edge fabs absorbs a large share of the cash TSMC generates: second-quarter capital spending alone was NT$508.4 billion.
Growth: Does This Company Have Real Upside?
Growth scores 78/100. Yahoo’s 36.0% revenue growth figure compares the second quarter with the same quarter of 2025 in Taiwan dollars, and the 77.4% earnings growth figure is the matching rise in quarterly earnings per share. Third-quarter revenue, up about 51%, shows growth accelerating, and revenue for the first nine months of 2026 was up 41.1%. The 18.9% compound growth rate Yahoo labels as five-year covers 2022 to 2025, when annual revenue rose from NT$2.26 trillion to NT$3.81 trillion despite a dip in 2023. Yahoo’s EV/Revenue multiple of 3.69 does not fit a company with a $2,351 billion market value and $139.1 billion of trailing revenue: market value alone is about 17 times revenue.
Opportunity: Is Now a Good Time to Enter?
Opportunity scores 37/100, above the 30 the model needs for a Buy. The P/E of 32.94 on trailing EPS of $13.76 is high in absolute terms, but against 77.4% earnings growth it gives a PEG ratio below 1, which the model rewards. The free cash flow yield is 1.0% and the dividend yield 0.8%, with a payout ratio of 25.4%, and trading near the top of the two-year range weighs on the score. The caveat is EV/EBITDA. Yahoo shows 5.18, a level the model scores as cheap, but rebuilding enterprise value from the market value plus debt less cash gives roughly $2.27 trillion, about 16 times revenue and 23 times EBITDA. The 93.33 price-to-book ratio is also out of line with the balance sheet, which implies about 12. On the rebuilt EV/EBITDA, Opportunity falls to about 23, below the Buy threshold, and the signal would be a Hold. The risks include a slowdown in AI-related chip demand, geopolitical tension around Taiwan and the heavy spending needed to stay ahead.
Taiwan Semiconductor Manufacturing Stock Analysis: The Bottom Line
Our Taiwan Semiconductor Manufacturing stock analysis finds an exceptionally profitable business with accelerating sales, priced in the upper end of its two-year range. Quality is 94/100, Growth 78/100 and Opportunity 37/100, for a recommendation score of 70/100 and a Buy signal. The bull case is a 60.3% operating margin, a conservative balance sheet and third-quarter sales up about 51%; the bear case is a P/E near 33, heavy capital spending, and dependence on AI-related demand in a geopolitically sensitive region. The Buy also rests on a Yahoo EV/EBITDA figure that looks understated; on a rebuilt figure, the model would rate the stock a Hold. The October 15 results will bring a new outlook. Buy / Hold / Sell reflects StreetBriefs’ quantitative scoring model (Quality, Growth, Opportunity), a data-driven signal for further research, not a personalized recommendation to transact.
Correction (October 3, 2026): An earlier version of this analysis, published August 26, 2026, described TSMC’s EV/Revenue multiple of 3.29 as moderate and treated its 87.05 price-to-book ratio as a meaningful reading. Both figures appear to be distorted by a mismatch in the source data. This version flags them and explains their effect on the model’s signal.
Financial Metrics Summary
| Metric | Value |
|---|---|
| Price & Valuation | |
| Current Price | $453.31 |
| 2-Year Low | $146.80 |
| 2-Year High | $472.78 |
| Market Cap | $2351.08B |
| P/E Ratio | 32.94 |
| EV / Revenue | 3.69 |
| Our Scores | |
| Quality Score | 94 / 100 |
| Growth Score | 78 / 100 |
| Opportunity Score | 37 / 100 |
| Profitability | |
| Earnings Per Share | $13.76 |
| Return on Assets | 19.0% |
| Return on Equity | 40.0% |
| Net Profit Margin | 49.9% |
| Gross Margin | 64.2% |
| Operating Margin | 60.3% |
| Growth | |
| Revenue Growth (5Y CAGR) | 18.9% |
| Revenue Growth (TTM) | 36.0% |
| Earnings Growth (TTM) | 77.4% |
| Balance Sheet | |
| Debt-to-Equity | 0.17 |
| Current Ratio | 2.46 |
| Quick Ratio | 2.13 |
| Income & Dividends | |
| Dividend Yield | 0.8% |
| Payout Ratio | 25.4% |
Data as of October 11, 2026
Our Three-Pillar Assessment
| Quality |
94/100 |
| Growth |
78/100 |
| Opportunity |
37/100 |
Quality measures business fundamentals: profitability, cash flow discipline, and balance sheet strength.
Growth captures revenue momentum, gross margin scalability, and the Rule of 40 efficiency test.
Opportunity signals entry timing: current valuation versus history and price position in the 2-year range.
Current price: $453.31 trading 4% below its 2-year high of $472.78 on weekly closes.
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This analysis is done using financial data from Yahoo Finance.
Always conduct your own due diligence and consult a qualified financial advisor before making investment decisions.
