Taiwan Semiconductor Stock: Does the Booming Revenue Outweigh Geopolitical Risk? | TSM Stock

Parkev provides a comprehensive analysis of Taiwan Semiconductor Manufacturing (TSM), highlighting a massive surge in revenue driven by the AI boom. Parkev notes that revenue has climbed from $25 billion in 2017 to over $143 billion on a trailing 12-month basis. A key driver for this growth is the rise of agentic AI, which is increasing demand for CPUs and accelerators. Parkev emphasizes that TSM's business model as a pure-play foundry is superior to competitors like Intel because it does not compete with its own customers, such as Apple and Nvidia.

Parkev acknowledges that management expects a slight decline in operating margins (targeting around 53% gross profit margins long-term) as the company expands manufacturing into the United States, which is less profitable than its Taiwan-based operations. However, Parkev remains optimistic due to the company's exceptional Return on Invested Capital (ROIC) of 34-35%, which significantly exceeds its cost of capital. Parkev believes the current valuation, with a forward P/E of 19, fails to reflect the company's true value, largely due to geopolitical concerns.