TSMC Reports Another 40% YoY Revenue Growth In May, Resisting Tariff Fears

TSMC reported a 39.6% year-over-year revenue increase for May, indicating resilience to recent trade uncertainties and further gains in market share during Q1 2025 amid challenges at Samsung's foundry business. The company's strong yields on its 2nm process and potential pricing power suggest the ability to deliver better-than-expected margins and EPS growth, with the stock trading at less than 20 times the estimated EPS for fiscal year 2026, despite a significant price increase since April.

Analysis

Taiwan Semiconductor Manufacturing Company (TSMC) reported a significant 39.6% year-over-year revenue increase for May, demonstrating robust growth and indicating minimal adverse impact from recent trade uncertainties. This strong performance is further contextualized by an increase in its market share during Q1 2025, particularly as competitor Samsung's foundry business faces new challenges. TSMC's technological prowess is underscored by its ability to achieve over 90% yields for its latest 2nm process, a positive development, especially if Intel's new leadership potentially scales back its foundry investments. The company's established pricing power and dominant market share position it favorably to deliver better-than-anticipated margins and earnings per share (EPS) growth. Despite a substantial stock price increase of over 50% since its April lows, TSMC's stock is currently trading at less than 20 times the estimated EPS for the fiscal year ending December 2026, suggesting continued return potential.

Key Decisions for Investors

• Investors should consider TSMC's strong May revenue growth of 39.6% YoY and Q1 2025 market share gains as key indicators of its operational strength and ability to navigate trade-related headwinds.
• The company's technological leadership, evidenced by high yields on its 2nm process, coupled with its pricing power, suggests a continued ability to drive margin expansion and EPS growth, which warrants close attention.
• Despite the stock's significant rally since April, the current valuation below 20 times estimated FY2026 EPS may still present an attractive entry point or justification for maintaining positions, though the recent rapid appreciation should be factored into risk assessment.