TSMC Stock Soars on AI Chip Boom—Should Investors Buy Now?

TSMC stock (NYSE: TSM) is on the brink of another breakout as investors position for the chipmaker’s third-quarter earnings on 16 October. Shares of Taiwan Semiconductor Manufacturing Company have already climbed to an all-time high near $307, boosted by relentless demand for advanced AI chips and expectations of record profit. AI boom drives double-digit revenue growth TSMC has pre-announced Q3 revenue of US$32.4 billion at the midpoint, a 30 percent jump year-over-year—easily outpacing the broader semiconductor industry. Analysts project net income could top NT$398 billion, setting a new quarterly record as cloud providers race to secure 3-nanometer and CoWoS capacity for next-generation GPUs. ADR premium signals global buying frenzy Foreign demand is so strong that TSMC’s U.S.-listed ADRs now trade at their fattest premium to Taipei-listed shares in more than two decades, underscoring how global investors view the foundry giant as the clearest pure-play on AI infrastructure. Why bulls say the rally can continue • Capacity expansion: Management has guided for US$32 billion–US$36 billion in 2025 capex, with Arizona and Japan fabs scheduled to come online, widening TSMC’s technological moat. • Margin resilience: Despite inflationary pressures, gross margin is expected to stay above 54 percent thanks to premium pricing on leading-edge nodes. • AI chips still supply-constrained: Nvidia, AMD and Apple remain on allocation, suggesting volume upside through 2026. • Potential index inclusion: Persistent share-price strength could lift free-float market cap enough for TSMC to become a top-ten weight in additional global ETFs, driving passive inflows. Risks investors need to watch Export-control uncertainty: The U.S. is reviewing licenses for TSMC’s Nanjing plant; any restrictions on tool shipments after December 2025 could curb 28 nm production. Geopolitical headline risk: Cross-strait tensions periodically jolt sentiment, though production redundancy in Japan and the U.S. provides partial mitigation. Rich valuation: At ~30× forward earnings, TSM trades above its 10-year median. A slower-than-expected AI spending cycle could compress multiples. Technical setup favors breakout TSM shares recently cleared resistance at US$300 on heavy volume, confirming a fresh uptrend. Momentum indicators remain bullish, with the 50-day moving average acting as support near US$282. A decisive close above US$310 could open the door to the next psychological level at US$350, while a pullback below US$280 would likely invite profit-taking. Bottom line With the AI hardware super-cycle still in its early innings and TSMC poised to post record Q3 results, TSM stock continues to screen as one of the most compelling large-cap growth stories in the market. Long-term investors focused on foundational AI infrastructure may see further upside, though short-term traders should brace for heightened volatility around earnings.