Taiwan Semiconductor Manufacturing Company Limited (TSM) Fair Value & PE Analysis
Semiconductors · NYSE
Current Price
$439.51
PE Ratio (TTM)
24.7x
Intrinsic Value
$795.62
+44.8% margin of safety
What Is Taiwan Semiconductor Manufacturing Company Limited's Fair Value?
As of 2026-10-28, applying a 24.7x earnings multiple to Taiwan Semiconductor Manufacturing Company Limited's (TSM) earnings per share of $17.81 yields a fair value estimate of $795.62 per share, versus a market price of $439.51.
Fair value from earnings multiples is sensitive to the multiple you choose. Across the sensitivity grid the estimate spans $658.96 to $950.1. This is a relative estimate anchored to earnings, not a statement of fact. For a cash flow based view, see the intrinsic value estimate on the DCF page.
How the PE model works · Recalculate in PE mode · TSM intrinsic value (DCF view)
Is Taiwan Semiconductor Manufacturing Company Limited (TSM) Overvalued?
At $439.51, TSM trades below its PE-based fair value estimate by a wide margin. By this model the stock looks cheap relative to its earnings power, but check whether earnings are sustainable before reading too much into it.
COMPETITIVE MOAT
↑Advanced Process Technology Leadership
TSMC's unparalleled expertise in leading-edge semiconductor manufacturing, particularly in 2nm nodes, creates a significant technological barrier. This allows them to produce the most advanced chips for AI and high-performance computing.
↑Economies of Scale and Manufacturing Capacity
The sheer scale of TSMC's operations and its vast manufacturing capacity provide cost advantages and ensure supply reliability. This makes it difficult for competitors to match their production volume and efficiency.
↑Customer Lock-in and Ecosystem Integration
TSMC's deep relationships with major chip designers, including those powering AI infrastructure, create high switching costs. Their integration into customer roadmaps makes them an indispensable partner.
INVESTMENT RISKS
↓Dependence on Key Customers for AI Growth
While AI demand is a tailwind, over-reliance on a few major AI chip designers could pose a risk if their market share or product cycles shift unexpectedly.
↓Capital Expenditure Intensity and Returns
The semiconductor industry requires massive, ongoing capital expenditures. TSMC must continually invest to maintain its technological edge, which can impact profitability and shareholder returns.
↓Talent Acquisition and Retention Challenges
Securing and retaining highly skilled engineers and technicians is critical for TSMC's advanced manufacturing. Intense competition for talent could hinder innovation and operational efficiency.
Base case
TSM base case PE valuation
Intrinsic Value
$795.62
Margin of safety
+44.8%
Expected annual return
+12.6%
Base case assumptions: 20.0% annual earnings growth, 24.68x target PE, 10% discount rate, 5 year projection. Data as of 2026-10-28.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the TSM PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Taiwan Semiconductor Manufacturing Company Limited respond.
Open PE Calculator for TSMCompany Overview
Taiwan Semiconductor Manufacturing Company Limited (TSMC), along with its affiliated entities, operates globally in the semiconductor industry, specializing in the manufacturing, packaging, meticulous testing, and worldwide distribution of integrated circuits and other crucial semiconductor components. Its expansive international presence covers key markets such as Taiwan, China, Europe, the Middle East, Africa, Japan, and the United States. The company is renowned for its diverse array of wafer fabrication processes. These capabilities enable the production of various advanced semiconductor types, including complementary metal-oxide-semiconductor (CMOS) logic, mixed-signal devices, radio frequency components, embedded memory, and bipolar CMOS mixed-signal circuits. Beyond its core foundry services, TSMC extends its offerings to include dedicated customer and engineering support. It also undertakes the production of specialized masks, actively invests in burgeoning technology startups, and manages the entire lifecycle—from research and development through to manufacturing, packaging, testing, and sales—of color filters. Furthermore, the company provides a range of investment services. TSMC's cutting-edge products are indispensable across numerous sectors, powering high-performance computing, modern smartphones, Internet of Things (IoT) ecosystems, sophisticated automotive systems, and a broad spectrum of digital consumer electronics. Established in 1987, the enterprise is officially headquartered in Hsinchu City, Taiwan.
Financial Metrics — TSM PE Stock Valuation Data
PE Ratio (TTM)
24.7x
PEG Ratio
0.41
Earnings Yield
4.05%
ROE (TTM)
41.2%
Revenue/Share (TTM)
$953.56
Dividend Yield
0.99%
Debt/Equity
0.14x
Frequently Asked Questions
What is the PE ratio of TSM?
The trailing twelve-month PE ratio of TSM reflects how much investors pay per dollar of Taiwan Semiconductor Manufacturing Company Limited's earnings. This metric is most useful when compared to Semiconductors peers and the company's own historical range.
Is TSM overvalued based on PE ratio?
TSM's PE of 24.7x combined with a PEG ratio of 0.41 provides a growth-adjusted perspective. A PEG below 1.0 means the P/E is low relative to the earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Semiconductors, a DCF analysis may be more appropriate.
How do I value TSM stock using PE ratio?
To value Taiwan Semiconductor Manufacturing Company Limited using PE: (1) Compare the current PE (24.7x) against the Semiconductors median to assess relative pricing, (2) check the PEG ratio (0.41) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of TSM?
TSM's PEG ratio is 0.41, calculated by dividing the PE ratio (24.7x) by the expected earnings growth rate. A PEG below 1.0 means the P/E is low relative to the expected earnings growth rate. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for TSM stock valuation?
PE ratio gives a quick relative read — how TSM is priced versus Semiconductors peers. DCF provides an absolute value based on projected free cash flows. For TSM, with a strong ROE of 41.2%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See TSM DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Technology valuationsP/E and DCF value TSM with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-10-28. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.