In This Article:
For Immediate Release
Chicago, IL – March 4, 2025 – Today, Zacks Investment Ideas feature highlights Taiwan Semiconductor TSM, Apple AAPL, Nvidia NVDA and AMD AMD.
Buy Taiwan Semi for Expansion Plans in the U.S.?
Taiwan Semiconductor is making headlines on Monday, with the chip giant set to invest $100 billion for manufacturing plants in the United States. As the world’s largest integrated circuit foundry company, the investment would expand Taiwan Semiconductor’s presence in the U.S., after previously shelling out $65 billion to build fabrication facilities in Arizona.
Strengthening the supply chain for chip-related materials, Taiwan Semiconductor’s products and services are critical to many U.S. firms, with its largest customer being Apple.
Apple Partnership
Taiwan Semiconductor is a critical supplier to many of the notable chip manufacturers in the U.S., including Nvidia and AMD. However, Apple is by far its largest customer with processing systems for Apple MacBook computers, iPads, and iPhones being enhanced by TSMC technology.
In 2023 it was reported that Apple contributed to a quarter of Taiwan Semiconductor’s revenue ($17 billion). Keeping in mind that Taiwan Semiconductor’s relations with the U.S. Government and American firms have continued to strengthen, it's noteworthy that the company’s revenue is expected to spike 26% in fiscal 2025 to $113.63 billion versus $90.08 billion last year. Plus, Taiwan Semiconductor’s top line is projected to expand another 19% in FY26 to over $135 billion.
EPS Growth & Positive Revisions
Known for its operational efficiency, Taiwan Semiconductor’s annual earnings are expected to soar 30% this year to $9.20 per share, compared to EPS of $7.04 in 2024. Even better, FY26 EPS is projected to increase another 20.
Notably, FY25 and FY26 EPS estimates are up 4% and 1% in the last 60 days, respectively.
TSM Price Performance & Valuation
Amid recent market volatility, Taiwan Semiconductor stock has now dipped 9% through the first three months of 2025 but is still up +30% over the last year. In the last three years, it's noteworthy that TSM has gains of nearly +70%, to impressively outperform the broader indexes and Apple’s +48%.
Trading around $178, TSM shares are at a 19.6X forward earnings multiple which is near their decade long median and well below a high of 34.4X during this period. At a slight discount to the benchmark S&P 500’s 22.4X, TSM may also be a cheaper way to get exposure to Apple’s market dominance with AAPL trading over $240 and 33.2X forward earnings.