Is Taiwan Semiconductor Manufacturing Company Limited (TSM) overvalued or undervalued?
Updated Nov 10, 2026 · hand-researched model · educational, not advice
At a recent price of $388.62, Taiwan Semiconductor Manufacturing Company Limited (TSM) trades 11% above TickerWorth's blended fair value of $348.54 per share — a discounted-cash-flow model cross-checked against peer multiples and asset value — meaning the market currently prices TSM overvalued vs our estimate of what the business is intrinsically worth. Our fair value sits below the market, an implied -10.3% move to close the gap if the business performs in line with our assumptions. This is an educational model, not a price target or a recommendation — the value moves with the inputs, which you can test yourself using the WACC slider below.
One of the lenses behind that blended figure is a discounted-cash-flow model, which on its own values TSM at about $237.79 per share. The rest of this page walks through that DCF — its assumptions, reverse-DCF and discount-rate sensitivity — because it is the auditable anchor of the blend.
The valuation discounts Taiwan Semiconductor Manufacturing Company Limited's projected free cash flows at a weighted-average cost of capital (WACC) of 12.1%, with a long-run terminal growth rate of 2.5%. About 70% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is typical for a stable, cash-generative business and a reminder that small changes in the discount rate or terminal growth assumption swing the intrinsic value meaningfully.
Running the DCF in reverse — solving for the growth the current price already assumes — TSM would need sustained revenue growth of more than 25%/yr to justify today's price. We don't quote a precise figure here, because past about 25% a year the reverse-DCF stops being informative: it solves for revenue growth alone, holding margins, capital intensity and the forecast horizon fixed, so a price well above our fair value has nowhere to go but growth. The honest reading is that the price implies growth this model can't reconcile — not that we forecast it.
Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, TSM's modeled DCF value ranges from about $194.31 to $311.58 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.
How to read this page: the DCF fair value is what Taiwan Semiconductor Manufacturing Company Limited would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of TSM's intrinsic value. Figures update as new filings and prices come in.
The assumptions behind TSM's DCF
| Input | Value | Source |
|---|---|---|
| Base-year revenue | $121,423,000,000 | FY2025 Form 20-F (filed 2026-04-16) — Consolidated Statements of Comprehensive Income; FY2025 audited consolidated financial statements (furnished with the Q4 2025 results package, 2026-01-15): Net revenue NT$3,809,054M for FY2025, +31.6% on FY2024's NT$2,894,308M, translated at the 20-F's stated convenience rate of NT$31.37/US$1.00 (Federal Reserve H.10 release, 2025-12-31 — see special_cases). TSMC reports in NT dollars under TIFRS (IFRS as issued by the IASB); every NT$ figure in this file is converted at that single filed rate, so every ratio in the model is the filed NT$ ratio. In the company's own period-average translations FY2025 revenue was US$122,424M (at the FY2025 weighted-average rate of NT$31.114 the statements print); the difference is purely the translation rate, not the business. |
| Base EBIT margin | 50.8% | FY2025 Form 20-F (filed 2026-04-16) — Consolidated Statements of Comprehensive Income; FY2025 audited consolidated financial statements (furnished with the Q4 2025 results package, 2026-01-15): Income from operations NT$1,936,092M / net revenue NT$3,809,054M = 50.83%. Gross margin was 59.9% (gross profit NT$2,281,294M); operating expenses were 9.1% of revenue (R&D 6.5%, SG&A 2.6%). The filed path into the base: 45.7% in FY2024, 50.8% in FY2025, and 59.0% for the first nine months of 2026 — the base year is the last AUDITED year, not the peak interim print, and the forecast path starts from the built FY2026 figure (58.6%), not from 50.83%. Non-operating items (net interest income of NT$93,368M in FY2025 on the cash pile, plus NT$5,497M of associate profits) sit BELOW operating income in TSMC's presentation and are not in this margin; the DCF values operations only and credits the cash separately in the bridge. |
| Forecast revenue growth | 47% → 28% → 23% → 19% → 16% | Assumption — TickerWorth's 5-year explicit forecast |
| Risk-free rate | 5.2% | FRED DGS10 — 10-year US Treasury constant maturity yield: Shared house input: the same 5.24% used by every researched model in this tracker (most recently ARM, COIN and JNJ, 2026-10-26), held so values stay comparable across companies. The current FRED print is lower (4.96% on 2026-10-22); refreshing it for TSMC alone would break comparability — it is a tracker-wide update, flagged here rather than smuggled into one company's model. |
| Beta | 1.40 | Assumption — Own regressions of TSM (NYSE ADS) on the S&P 500 (VOO as the index proxy) from Yahoo price history; the ADS is the listed security, so the regression is on the traded instrument: Measured, on the ADS itself. The five windows in the APP/NBIS/ARM set: 2Y monthly 0.98 (24 observations), 2Y weekly 1.40 (105), 1Y weekly 1.18 (53), 1Y daily 2.13 (251), 6M daily 2.38 (126). The value used, 1.40, is the MEDIAN of the five. The disagreement between windows is documented, not hidden: the monthly and weekly windows describe a company modestly more volatile than the market (0.98-1.40), while the two daily windows — measured across the 2025-26 AI tape, in which TSM roughly doubled and swung with every accelerator headline — print above 2. Vendor betas (5Y monthly constructions against the S&P 500) print near 1.0, in line with this file's own monthly windows; no shrink is applied toward them, because the house method is the median of the measured set, and the explainer prices the beta lever explicitly (each 0.1 near the value used, the kindest window, and the vendor-style ~1.0). At a beta of 1.0 the value would be materially higher — the explainer shows the figure rather than asserting it here. |
| Terminal growth | 2.5% | Assumption — House default — long-run nominal growth ceiling applied across the tracker: Shared house input (2.5%), identical in every researched model in this tracker. |
| Diluted shares | 5,186M | FY2025 Form 20-F (filed 2026-04-16) — cover page; Q3 2026 consolidated condensed financial statements (furnished on Form 6-K, 2026-10-15) — balance sheet (capital stock) and income statement notes (ADS ratio): THE CENSUS, in ADS millions, because the listed price is per ADS and the model's output must be per ADS. The 20-F cover states the exact count: 'As of December 31, 2025, 25,932,524,521 Common Shares, par value NT$10 each were outstanding.' Every financial statement TSMC files repeats the ratio: '1 ADR equals 5 ordinary shares' (Q3 2026 statements, note 2). Census = 25,932,524,521 / 5 = 5,186,504,904 ADS, entered as 5,186.5M. The bridge ties at both ends of the pairing: capital stock on the balance sheet is NT$259,325M at 2025-12-31 and NT$259,324M at 2026-09-30 — the same NT$10-par census, unchanged; TSMC has no treasury shares and no buyback (it pays a quarterly cash dividend instead), no second share class, and no dilutive overhang of consequence — the filed weighted-average DILUTED count is 25,932M common shares for 9M 2026, the same census within rounding (dividing by it instead would move the answer by less than 0.1%). NOT the free float and never the Taipei-only count: every common share, whoever holds it (the R.O.C. National Development Fund holds about 6%), carries the same claim; and dividing an ADS price by a common-share count — the single easiest error with this filer — would understate the value fivefold. |
| Market price | $388.62 | Delayed quote · as of 2026-11-10 05:03 UTC |
Compare TSM with its peers
Companies people research alongside TSM
Explore more
Most undervalued stocks (per our valuation) · Undervalued Technology stocks · All valued stocks · Interactive TSM valuation & downloadable modelTickerWorth is an educational DCF tool, not a licensed investment adviser. Figures are estimates derived from public filings and market data and can be wrong.