The Smartest Tech Stock to Buy With $1,000 Right Now

Taiwan Semiconductor (TSMC) reported fiscal Q3 2025 revenue of $33.1 billion, up 40.8% year-over-year, and EPS of $2.91, up 49.8%, as surging AI-driven demand lifted adoption of advanced nodes (<7nm accounted for 74% of wafer revenue and 3nm for 23%) and strained supply of CoWoS packaging used to pair logic with high-bandwidth memory. Management says demand is so strong that customers’ customers are seeking foundry capacity, and TSMC is rapidly expanding advanced-node and advanced-packaging capacity across the U.S., Japan, Germany and Taiwan; Bernstein forecasts CoWoS will reach 125,000 wafers/month and overall capacity 1.25 million wafers/year by 2026 (including OSAT contributions). The combination of constrained, high-value packaging capacity and aggressive capital expansion underpins TSMC’s strong profitability and creates a structural advantage in the AI accelerator market, supporting the stock’s ~54% YTD gain through Dec. 9, 2025.

Analysis

TSMC reported fiscal Q3 2025 revenue of $33.1 billion, up 40.8% year-over-year, and EPS of $2.91, up 49.8%, driven by surging AI-related demand. Management cites unusually strong pull from end customers and a sharp rise in token volumes, which is increasing demand for high-performance, energy-efficient chips and lifting advanced-node adoption.

Advanced technologies (sub-7nm) accounted for 74% of wafer revenue and the 3nm node alone contributed 23%, while CoWoS advanced packaging used to pair logic with high-bandwidth memory is described as severely supply constrained. Bernstein projects CoWoS capacity reaching 125,000 wafers/month and total capacity rising to 1.25 million wafers/year by 2026, and TSMC is expanding advanced-node and packaging capacity across the U.S., Japan, Germany and Taiwan to address the bottleneck.

The company is translating constrained, high-value packaging into robust profitability despite heavy capital expenditures, supporting the stock’s ~54% YTD gain through Dec. 9, 2025. Key execution risks are the timing and scale of capacity ramp, continued CoWoS scarcity that could cap near-term growth or conversely support pricing power, and the need to monitor capex-to-sales dynamics as expansion completes.

Key Decisions for Investors

• Consider increasing selective exposure to TSM to capture AI-driven demand given strong Q3 results and structural CoWoS scarcity,
• Size new positions conservatively and account for the ~54% YTD rally and heavy ongoing capex; avoid all-in allocation,
• Monitor leading indicators closely: CoWoS wafers/month, total wafer capacity guidance to 2026, 3nm revenue share, and token-volume trends for signs of sustained demand,
• Use position hedges or option strategies if holding a large position to protect against execution delays or a pullback driven by capex timing or short-term supply adjustments