This Chipmaker Is One of the Largest Companies by Market Cap. But Is Its Stock a Buy?

Core Insights - TSMC is a leading player in the semiconductor industry, particularly in AI chip manufacturing, with a market cap exceeding $1.7 trillion, making it one of only 11 companies valued over $1 trillion [2][6] - The company has seen significant growth in its high-performance computing (HPC) segment, which has surpassed smartphone chip manufacturing in revenue contribution [4][5] Company Performance - TSMC's HPC revenue has increased dramatically from $7.26 billion in Q3 2023 to $18.87 billion in Q3 2025, reflecting a growing demand for advanced AI chips [5] - The company's revenue from HPC accounted for 57% of total revenue in Q3 2025, compared to 30% from smartphones [4] Market Position - TSMC holds a dominant position in the chip foundry market with approximately 72% market share, and over 90% in advanced AI chips, far ahead of competitors like Samsung and Intel [9][8] - The company operates on a foundry model, manufacturing chips for other companies, which has allowed it to maintain a strong market presence [3] Financial Metrics - TSMC has a gross margin of 59.02% and a dividend yield of 0.90%, indicating solid financial health [6] - The stock has averaged annual returns close to 22% over the past five years, suggesting a strong investment trajectory [10] Long-term Outlook - Despite potential cooling in AI demand, TSMC's diversified product offerings across various tech sectors (smartphones, computers, TVs, etc.) are expected to sustain its business strength [7][11] - The company's established competitive moat and indispensable role in the tech industry position it as a strong long-term investment [11]