TSM: Taiwan Semiconductor Manufacturing Company Ltd.
Holding · 10.0% · trim (from 20.3%) · mega · Technology · last 418.51
Entry 405.00–419.00 · Stop 393.00 · Target 460.00 · Sell ≈ 12 shares (≈ $5,022 at 418.51)
Highest-conviction long (70; forward P/E 17.9x, revenue +51%, F-TSM-1, F-TSM-10), cut to 10% to meet the 12% position cap and keep semiconductors in check.
Thesis (long, position, conviction 70)
Bull: TSMC just posted blowout Q3 2026 results — revenue +50.9% YoY, net income +68.7% YoY, with 66.4% gross margin and 51.1% net margin (F-TSM-1, F-TSM-2, F-TSM-3) — and guided Q4 revenue to $52.3–54.3B with gross margin holding at 65–67% (F-TSM-5), showing no sign of AI/advanced-node demand slowing. Advanced nodes (7nm and below) are now 79% of wafer revenue (F-TSM-4), confirming TSMC's structural pricing power and technology leadership in the AI buildout. September revenue was up 54.6% YoY and 9-month revenue is up 41.1% YoY (F-TSM-6, F-TSM-7), so the growth is broad-based, not a one-quarter spike. Despite this, forward P/E is just 17.9x versus a trailing 27.12x (F-TSM-10), implying the market expects earnings to grow sharply into the multiple — a reasonable bet given the guide. Sell-side sentiment is overwhelmingly positive (12 strong buys, 28 buys, 2 holds, zero sells — F-TSM-11). The stock is down 7.23% over one month and trading below its 20/50-day averages (F-TSM-8, F-TSM-9) while still holding above its 200-day MA (396.05) and still up 5.15% over three months with positive relative strength vs SPY (+2.07%, F-TSM-9) — this looks like a pullback within an intact uptrend rather than a trend break, offering a better entry into a quality compounder.
Bear: The stock has corrected meaningfully (-13.85% from 52-week high, F-TSM-8) and lost short-term momentum (RSI 41.46, below 20/50-day MAs), so further near-term weakness toward the 200-day MA (~396) is plausible before it stabilizes. The brief flags an unreconciled EPS discrepancy between the earnings-calendar data and the company release, and no annual SEC fundamentals were available — data quality gaps that slightly cloud the valuation picture. Trailing P/E of 27x is not cheap in absolute terms, and the bull case depends heavily on the forward estimate holding up; any AI-capex digestion, customer concentration issues, or geopolitical shock (Taiwan Strait risk is structurally embedded in this name though not explicitly flagged in the brief) could compress both the multiple and the growth trajectory quickly given the stock's size and crowded ownership.
Valuation: Trailing P/E of 27.12x looks full, but forward P/E of 17.9x against 50%+ revenue growth, 66% gross margins and 51% net margins (F-TSM-10, F-TSM-1, F-TSM-3) implies a sub-1 PEG — attractive if the Q4 guide (F-TSM-5) and current growth cadence hold. The brief has no FCF-yield or capex detail, so this view rests on reported margins and guided growth rather than a full free-cash-flow picture.
Catalysts
2027-01-13: Q4 2026 earnings release and FY2027 guidance update
F-TSM-1: For the quarter ended 2026-09-30, TSMC reported revenue of NT$1,494.24 billion, up 50.9% year over year and 17.6% quarter over quarter. (as of 2026-10-15)[E7322]source
F-TSM-2: For the quarter ended 2026-09-30, TSMC reported net income of NT$763.06 billion, up 68.7% year over year. (as of 2026-10-15)[E7322]source
F-TSM-3: In the third quarter of 2026, TSMC reported a 66.4% gross margin, a 58.7% operating margin and a 51.1% net profit margin. (as of 2026-10-15)[E7322]source
F-TSM-4: In the third quarter of 2026, advanced technologies of 7-nanometer and below accounted for 79% of TSMC wafer revenue. (as of 2026-10-15)[E7322]source
F-TSM-5: For fourth-quarter 2026, management guided to revenue of US$52.3–54.3 billion, gross margin of 65%–67% and operating margin of 56.5%–58.5%. (as of 2026-10-15)[E7322]source
F-TSM-6: TSMC reported September 2026 revenue of NT$511.86 billion, down 0.6% from August and up 54.6% year over year. (as of 2026-10-08)[E7316]source
F-TSM-7: From January through September 2026, TSMC reported revenue of NT$3,898.73 billion, up 41.1% year over year. (as of 2026-10-08)[E7316]source
F-TSM-8: TSM closed at US$418.51 on 2026-10-23, 13.85% below its 52-week closing high; it closed below its 20-day and 50-day moving averages but above its 200-day moving average. (as of 2026-10-23)[E7088]
F-TSM-9: As of 2026-10-23, TSM's one-month return was -7.23%, its three-month return was 5.15%, and its three-month relative strength versus SPY was 2.07%. (as of 2026-10-23)[E7088]
F-TSM-10: The provided Yahoo-derived fundamentals reported trailing P/E of 27.12 and forward P/E of 17.90 as of 2026-10-23. (as of 2026-10-23)[E7089]
F-TSM-11: The October 2026 analyst recommendation count for TSMC's Taiwan-listed symbol was 12 strong buys, 28 buys and 2 holds, with no sells or strong sells. (as of 2026-10-01)[E7321]
F-TSM-12: The supplied holdings record lists 24 shares of TSM as of 2026-10-23. (as of 2026-10-23)[E7119]
What would change the view
A close below 393 (invalidates the 200-day support thesis)
Q4 guidance miss or gross margin guide cut below 65%
A reconciled EPS figure materially below the NT$29.43 diluted EPS implied by the Q3 release
Analyst rating mix shifting meaningfully toward holds/sells from the current 40 buy-equivalent vs 2 hold
Data quality
Quality score 96/100.
Gap: The SEC annual fundamentals tool returned no annual financial data for TSM.
Gap: The supplied analyst earnings-calendar data lists Q3 2026 actual EPS as 148.9434, while the company release reports Q3 diluted EPS of NT$29.43; the figures are not reconciled in the available data.
Gap: The quote block is timestamped 2026-10-24, after the context's stated date of 2026-10-23; the analysis uses the daily-bar close dated 2026-10-23 instead.