Taiwan Semiconductor Manufacturing Company Ltd. (TSM) fair value
Technology · Semiconductors · NYSE · United States
$418.51+1.49%
Market cap $2.17TNext earnings 2026-10-15Updated Oct 18, 2026
Our verdict
Trades 41% above our fair value
Price
$418.51
Model fair valueConfidence: good
$298
Model range
$165 to $473
Fair value $298
Price $419
3 models fit Taiwan Semiconductor Manufacturing Company Ltd. and they disagree: 0 of 3 land within 15% of the average.
Two or more of our models back this value.
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Valued as a growth company: Discounted cash flow, P/E comparison, and EV/EBITDA comparison.
ACCE opinionTaiwan Semiconductor Manufacturing Company Ltd. (TSM)
Fair value (3 models)
$298
ACCE price target
$443
Rating
Overvalued
Horizon
12 months
Fair value published on 18 Oct 2026, 15:05 CEST; previously $301 since 18 Oct 2026, 00:00 CEST.
ACCE price target published on 18 Oct 2026, 01:52 CEST; previously $526 since 3 Oct 2026, 00:00 CEST.
Rating published on 18 Oct 2026, 15:05 CEST.
Price used: $419 at the close on 23 Oct 2026, 22:00 CEST.
Models: Discounted cash flow, P/E comparison, and EV/EBITDA comparison.
Fair value: the average of the applicable valuation models (discounted cash flow, multiples, residual income, dividend discount, shareholder yield), each run on the latest financial statements and the market price shown. Opinion columns (fair value, target, rating) are shown apart from the data. Full methodology: acceinvestments.com/data/how-we-value-stocks
Conflicts of interest: The author holds no personal position in this security. General statement
Produced by ACCE Investments (acceinvestments.com)
Data
Price vs fair value
40.6% above
-28.9% to fair value
ACCE score
83
out of 100
Analysts
95% buy
21 covering
P/E
27.1x
forward 17.9x
1-year return
+44.0%
Dividend yield
0.91%
Taiwan Semiconductor Manufacturing Company Ltd. in four questions
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Overview
ACCE thesis
TSMC manufactures advanced logic chips on a contract basis, so it makes the processors for Apple, Nvidia, AMD and most other fabless designers rather than selling a branded product of its own. Its moat is process leadership: it is the only foundry producing leading-edge nodes at volume, and that lead has let it hold a 64.2% gross margin and a 60.3% operating margin while revenue grew 36.0%. The near-term driver is AI accelerator demand, which keeps advanced-packaging and leading-node capacity tight and pricing firm. At a 27.4 trailing P/E and 21.4 forward P/E, the market is paying less for the next twelve months of earnings than for the last twelve, which means the growth rate is not fully reflected in the multiple. The 40.0% ROE and a score of 88/100 make it a candidate worth a closer look, with the main questions being Taiwan geopolitical exposure and how durable the pricing power is once competitors narrow the node gap.
⚠ Investor warnings · 2 flagsAI-assisted·How I use AI
moderate
Valuation stretched vs model
The stock trades 40.6% above the model fair value of $297.58, while the ACCE price target of $443.00 sits 5.5% above the current price. Valuation is the main weak spot, with a valuation sub-score of 54.
moderate
Score drifted lower
The ACCE score fell 4 points over 90 days, from 92 to 88, with valuation the component dragging it down.
AI research notes
AI-assisted·How I use AIWritten Oct 18, 2026 · figures from 2026-09-30 · prices to Oct 23, 2026
Why it could do well
Revenue grew 36.0% over the past year, well above its 5-year average of 23.5% per year.
Net margin of 49.9% and return on equity of 40.0% show the business turns sales into profit very efficiently.
Analysts rate 95% of the stock Buy or Strong Buy, and their mean price target sits 41.6% above today's price.
Why it could disappoint
The share price of $418.51 trades 40.6% above the model fair value of $297.58, which implies the stock is expensive.
At a free cash flow yield of 1.4%, investors earn little cash return on the price they pay today.
Nearly all leading-edge capacity sits in Taiwan, so any cross-strait escalation could hit revenue and the valuation at once.
Each chip shows the exact figure and where it comes from. A claim without a source is not published.
Walk me through this stock
Plain-English pros, cons, and what to watch. Pro feature.
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Valuation
INVESTOR
Where TSM's valuation models land
Price
$418.51
Model fair value
$298
Model range
$165 to $473
Fair value $298
Price $419
The price sits inside the model range.
Model
Fair value
Upside
Discounted cash flow
EV/EBITDA comparison
P/E comparison
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Quality
INVESTOR
Quality and conviction INVESTOR FEATURE
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+Conviction breakdown and growth / value / quality / momentum scores