Is TSMC Stock a Buy Now?

Stock Performance and Market Outlook - TSMC's stock has gained 87% in the past year, with shares jumping almost 4% following the release of its Q4 2024 results [1][2] - The company's Q1 2025 revenue guidance of $25 billion to $25.8 billion is 6% higher than Wall Street's expectations [3] - TSMC's dominant 64% share in the global foundry market positions it well to capitalize on the projected growth of the semiconductor market, which is expected to reach $1.47 trillion by 2030 [7] Financial Performance - TSMC reported Q4 2024 revenue of $26.9 billion, a 37% increase year-over-year, with adjusted earnings per share rising 55% to $2.24 [3] - Full-year 2024 revenue reached just over $90 billion, marking a 30% increase from 2023 levels [4] - The company anticipates a 35% year-over-year increase in Q1 2025 revenue, with full-year revenue growth expected in the mid-20% range [4] Profitability and Growth Drivers - TSMC expects a gross margin of 58% in Q1 2025, up from 53.1% in the same quarter last year [5] - Revenue from AI chips is projected to grow at a CAGR of 40% over the next five years, while overall revenue is expected to grow at a CAGR of 20% [5][6] - Growth opportunities in high-performance computing, AI, 5G smartphones, and PCs are expected to drive the semiconductor market and benefit TSMC [6] Valuation and Investment Considerations - TSMC's stock is trading at 33 times trailing earnings, higher than its five-year average of 22, but its forward P/E ratio of 24 suggests strong future earnings growth [9] - The forward P/E ratio is lower than the Nasdaq-100 index's forward earnings multiple of 25, indicating that TSMC stock remains a good value despite its recent gains [9][10]