Taiwan Semiconductor Manufacturing Company’s stock (TSMC) just delivered a solid earnings beat, but the bigger story isn’t about the numbers, it’s about what comes next.
For Q1 2025, TSMC reported net income of NT$361.56 billion, up a massive 60.3% YoY, and revenue of NT$839.25 billion, a 41.6% increase. It outpaced analyst estimates on both fronts. But despite this, TSMC stock dipped nearly 1%, extending its 2025 slump to over 20% YTD.
Why the disconnect? In one word: uncertainty.
There’s no doubt TSMC is still riding high on the AI wave. Its high-performance computing segment, home to chips for Nvidia and AMD, accounted for 59% of revenue last quarter, with 7nm and below technologies making up 73% of total wafer revenue. CEO C.C. Wei called the demand for 3nm and 5nm chips “strong,” and reiterated TSMC’s 2025 revenue guidance of mid-20% growth.
But here’s the kicker: U.S.-Taiwan trade tensions are once again casting a long shadow. With President Trump’s renewed push for “reciprocal tariffs,” Taiwan faces a blanket 10% levy that could rise to 32% in 90 days. Even more pressing are the looming AI chip export restrictions, targeting TSMC clients like Nvidia and AMD, both of whom rely heavily on TSMC’s fabs.
This puts TSMC in a politically tight spot. On one hand, it continues to benefit from the AI infrastructure boom, especially after Nvidia began U.S. production of Blackwell chips at TSMC’s Arizona site, and AMD committed to domestic chip production for the first time. On the other hand, geopolitical friction is threatening its export pipeline and potentially reshaping its revenue mix.
So what’s the play here for investors?
TSMC is hedging, big time. It’s pouring $100 billion more into U.S. expansion (on top of the $65B already pledged for three plants), clearly aiming to de-risk dependence on Taiwan-based manufacturing. Yet, C.C. Wei pushed back on speculation of a joint venture with Intel, reiterating that TSMC is not exploring any tech-sharing or JV structures with outside firms.
In the short term, that strategy might reassure some stakeholders. But longer-term, it raises new questions: Can TSMC maintain margins as it scales U.S. production? Will new U.S. policies drive up costs or curb access to clients? And perhaps most crucially, can TSMC stock rebound in a climate where geopolitical headlines move faster than chip yields?
The fundamentals remain strong, TSMC is still the backbone of global AI hardware. But as investors have seen time and again, even the best earnings can’t completely price in political risk.
Bottom line: TSMC stock is a long-term growth story with short-term volatility. If you’re in for the ride, keep your eyes on regulatory risk, client diversification, and the company’s ability to scale globally without losing its pricing power.
