The company delivers 35% annual revenue growth against a 47% margin structure and a wide economic moat at a PEG of 1.29, with four consecutive earnings beats reinforcing execution discipline. The 2.4-to-1 risk/reward is favorable, though weak momentum and free cash flow converting at only 38% of net income justify a small initial position pending a technical breakout.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is expanding at 35% year-over-year, a rate the data identifies as the highest-scoring dimension in the overall assessment, sustaining a growth trajectory well above most peers in the covered universe. Growth breakdown | Revenue growth remains above 20% YoY for the next two reporting periods, sustaining above-consensus expansion. | →Stable |
| CounterA deceleration from 35% toward mid-double digits would meaningfully compress the forward P/E of 21.9x given the growth premium embedded in the current multiple, and the sector carries a negative modifier that can amplify valuation compression during a slowdown. | ||
The company sustains a wide economic moat backed by net margins of 47%, ROE of 36%, and a near-perfect Piotroski F-Score of 9 out of 9, placing it in the top tier of its peer group for both return quality and balance-sheet strength. Peer comparisons identify both ROE and margins as best-in-class, supporting a durable quality premium over the long cycle. Quality breakdown | Net margin holds above 45% and ROE sustains above 30% over the next 12 months as moat-driven pricing and cost advantages persist. | →Stable |
| CounterA wide moat assessment depends on sustained competitive positioning; if demand for advanced capacity softens, the fixed cost structure may compress margins below the current level, making the franchise appear more cyclical than the quality scorecard implies. | ||
The company has beaten consensus earnings estimates in each of the four most recent quarters, with an average positive surprise of approximately 7%, demonstrating consistent delivery above expectations across varied conditions. Earnings | EPS surprises remain positive in both of the next two quarterly reports, consistent with the unbroken four-quarter beat cadence. | →Stable |
| CounterWith approximately 3.4% remaining to the take-profit level, near-term reward is compressed; a guidance reset or narrowing surprise at the upcoming report could disappoint a market accustomed to consistent outperformance. | ||
Revenue is expanding at 35% year-over-year, a rate the data identifies as the highest-scoring dimension in the overall assessment, sustaining a growth trajectory well above most peers in the covered universe.
→Stable- Expectation
- Revenue growth remains above 20% YoY for the next two reporting periods, sustaining above-consensus expansion.
CounterA deceleration from 35% toward mid-double digits would meaningfully compress the forward P/E of 21.9x given the growth premium embedded in the current multiple, and the sector carries a negative modifier that can amplify valuation compression during a slowdown.
The company sustains a wide economic moat backed by net margins of 47%, ROE of 36%, and a near-perfect Piotroski F-Score of 9 out of 9, placing it in the top tier of its peer group for both return quality and balance-sheet strength. Peer comparisons identify both ROE and margins as best-in-class, supporting a durable quality premium over the long cycle.
→Stable- Expectation
- Net margin holds above 45% and ROE sustains above 30% over the next 12 months as moat-driven pricing and cost advantages persist.
CounterA wide moat assessment depends on sustained competitive positioning; if demand for advanced capacity softens, the fixed cost structure may compress margins below the current level, making the franchise appear more cyclical than the quality scorecard implies.
The company has beaten consensus earnings estimates in each of the four most recent quarters, with an average positive surprise of approximately 7%, demonstrating consistent delivery above expectations across varied conditions.
→Stable- Expectation
- EPS surprises remain positive in both of the next two quarterly reports, consistent with the unbroken four-quarter beat cadence.
CounterWith approximately 3.4% remaining to the take-profit level, near-term reward is compressed; a guidance reset or narrowing surprise at the upcoming report could disappoint a market accustomed to consistent outperformance.
▸ Show 1 more pillar▾ Show fewer
Free cash flow converts at only 38% of net income — a level the data flags as a quality red flag — limiting the realized cash available for reinvestment or shareholder return relative to what the income statement alone implies.
→Stable- Expectation
- FCF as a percentage of net income rises toward 60% or above over the next 12 months as the gap between reported earnings and cash generation narrows.
CounterIf the FCF-to-net-income gap persists, the quality case resting on strong margins and ROE may overstate accessible cash; a premium multiple paired with weak cash conversion can be a persistent source of disappointment if the conversion rate remains depressed.
Taiwan Semiconductor Manufactur (TSM) Stock Analysis
Breakout setup · Catalyst-Driven edge
Technology · Semiconductors
Wait for pullback to $417.31. BUY gates pass at $457.00, but analyst target reached - limited upside remaining argues for a more patient entry. Engine's entry $417.31 (Atr Pullback Sticky) is the shallowest technical level that clears the 2:1 A.R:R minimum.
Taiwan Semiconductor Manufacturing Company Limited, together with its subsidiaries, manufactures, packages, tests, and sells integrated circuits and other semiconductor devices in Taiwan, China, Europe, the Middle East, Africa, Japan, the United States, and internationally. It... Read more
Wait for pullback to $417.31. BUY gates pass at $457.00, but analyst target reached - limited upside remaining argues for a more patient entry. Engine's entry $417.31 (Atr Pullback Sticky) is the shallowest technical level that clears the 2:1 A.R:R minimum. Chart setup: Golden cross, above all MAs, RSI 51, MACD bullish. Fundamentals strong but target reached (-3.4% upside). Wait for pullback. Score 7.1/10, moderate confidence.
Passes 7/8 gates (positive momentum, clean insider activity, no SEC red flags, news events none recent, earnings proximity 22d clear, semi cycle peak clear, materials cycle peak clear). Fails on favorable risk/reward ratio. Suitability: moderate.
Recent developments
updated 2026-06-25Recent Developments — Taiwan Semiconductor Manufactur
Latest news
- NEWS Taiwan Semiconductor Manufacturing (TSM): One of the Harvard University Stock Picks - Yahoo Finance — Yahoo Finance positive
- NEWS Here’s Why Taiwan Semiconductor Manufacturing (TSM) Is One of the Best Fundamental Stocks to Invest in According to Bill — Yahoo Finance positive
- NEWS TSMC Is Doubling Down on AI With A13. Does That Make TSM Stock a Buy? - Barchart.com — Barchart.com positive
- NEWS TSM stock spikes overnight: Q1 print tops estimates on strong demand for AI chips, advanced processors - MSN — MSN positive
- NEWS Can Taiwan Semiconductor Shares Hit $500 Before 2026 Ends? - 24/7 Wall St. — 24/7 Wall St. positive
Generated 2026-06-25T03:27:38Z.
Upcoming dated catalysts
Thesis
Key Metrics
Quality Signals
Options Flow
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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Rating Breakdown
2 ceiling hits
Price Targets
Position Sizing
Risk Alerts
Earnings
Verdict History
Frequently Asked Questions
Wait for pullback to $417.31. BUY gates pass at $457.00, but analyst target reached - limited upside remaining argues for a more patient entry. Engine's entry $417.31 (Atr Pullback Sticky) is the shallowest technical level that clears the 2:1 A.R:R minimum. Chart setup: Golden cross, above all MAs, RSI 51, MACD bullish. Fundamentals strong but target reached (-3.4% upside). Wait for pullback. Target $467.25 (+2.2%), stop $375.61 (−21.7%), Setup A.R:R 1.7:1. Score 7.1/10, moderate confidence.
Take-profit target: $467.25 (+11.3% upside). Target $467.25 (+2.2%), stop $375.61 (−21.7%), Setup A.R:R 1.7:1. Stop-loss: $375.61.
Analyst target reached - limited upside remaining.
Taiwan Semiconductor Manufactur trades at a P/E of 37.6 (forward 21.9). TrendMatrix value score: 5.9/10. Verdict: Buy (Wait for Entry).
42 analysts cover TSM with a consensus score of 4.2/5. Average price target: $473.
What does Taiwan Semiconductor Manufactur do?Taiwan Semiconductor Manufacturing Company Limited, together with its subsidiaries, manufactures, packages, tests, and...
Taiwan Semiconductor Manufacturing Company Limited, together with its subsidiaries, manufactures, packages, tests, and sells integrated circuits and other semiconductor devices in Taiwan, China, Europe, the Middle East, Africa, Japan, the United States, and internationally. It provides various wafer fabrication processes, such as processes to manufacture complementary metal- oxide-semiconductor (CMOS) logic, mixed-signal, radio frequency, embedded memory, bipolar CMOS mixed-signal, and others. The company also involved in providing customer and engineering support services; manufacturing of masks; investment in technology start-up companies; research, designing, developing, manufacturing, packaging, testing, and sale of color filters; and investment activities. Its products are used in high performance computing, smartphones, Internet of things, automotive, and digital consumer electronics. Taiwan Semiconductor Manufacturing Company Limited was incorporated in 1987 and is headquartered in Hsinchu City, Taiwan.