Taiwan Semiconductor Manufacturing Company (TSM) stock is undervalued with a forward P/E ratio of 24.31, lower than the sector average of 28.53. Compared to Broadcom, AMD, and NVIDIA, TSM is cheaper on a P/E basis. TSMC leads in AI chip production, with AI-related revenues tripling in 2024 and expected to double again by 2025.

TSM’s financial performance is strong, with a 41% revenue increase in Q3 2025. The company raised its revenue growth guidance due to high demand for 3nm and 5nm chips. Technical indicators suggest a bullish trend for TSM stock, which has seen a 48.2% YTD price return. Short-term risks include softness in key markets and global expansion challenges.

Despite near-term challenges, TSM’s long-term prospects remain solid. The company’s focus on advanced chip manufacturing and AI demand positions it for future growth. However, caution is advised due to short-term hurdles and geopolitical risks. Holding the stock is recommended for now, with TSM carrying a Zacks Rank #3 (Hold). Consider “2nd Wave” AI stocks for potential future growth beyond Nvidia.

Read more at Nasdaq: Taiwan Semiconductor Trading at a Discount: How to Play the Stock?