Why is TSMC still worth watching? An analysis backed by data.

Key Highlights

• The global chip market size will double, with TSMC holding 70% of the speaking rights.
• Revenue of 8.9 billion dollars in the first nine months before 2025, a year-on-year increase of 36%
• Stock price increased by over 50% but PE is only 29, lower than industry giants.

How big is the market cake?

According to Grand View Research, the AI chip market is expected to expand at a compound annual growth rate of 29%, reaching a size of $323 billion by 2030. The entire semiconductor industry is even more robust, with an expected increase from the current $789 billion to $1.3 trillion.

What does TSMC's 70% foundry market share mean? Chip design giants like Apple, NVIDIA, Qualcomm, AMD, and Broadcom all rely on it. Among them, NVIDIA's AI chips have surged in popularity, directly driving TSMC's capacity demand.

How fast is the growth?

The most intuitive data: TSMC's revenue for the first three quarters of 2025 is nearly $89 billion, a year-on-year increase of 36%. During the same period, revenue costs rose by 24%, indicating that although production capacity is expanding, cost pressures remain within a controllable range.

However, there is a detail worth noting - the comprehensive income growth rate of 30% is slower than the revenue growth rate, which reflects the rising costs of the international trade environment and geopolitical factors.

Is the valuation really expensive?

The stock price has risen 50% in a year, which seems quite crazy. However, from a PE perspective, TSMC's current price-to-earnings ratio of 29 times is actually higher than the 5-year average of 25 times, so it doesn't look that outrageous.

Key comparison: Its major client NVIDIA has a PE ratio of over 40, while Apple is above 35 times. From this perspective, TSMC is actually cheaper.

Buffett quickly sold off his stake in TSMC due to geopolitical risks (most of its production capacity is in Taiwan), and this concern is real. However, there is a counter-logic - the fact that the world needs its chips actually reduces the real risk.

Underlying Logic

The explosive growth in demand for AI hardware is not a short-term hype, but an inevitability of industrial upgrading. Currently, only TSMC can manufacture the most advanced chips at this scale, which is a unique moat. Financial data indeed supports this judgment—both revenue and profit are growing at a high speed.

Geopolitical risks do exist, but they have already been reflected in the valuations. Compared to its peers, TSMC is not considered cheap, but it is also not considered expensive.