TSMC Stock Remains Stable Despite 60% Profit Jump and Growing AI Demand, Trump Tariff Concerns
TSMC delivered impressive Q1 2025 results with net income up 60.3% YoY to NT$361.56 billion and revenue increasing 41.6% to NT$839.25 billion, exceeding analyst expectations. Despite this strong performance, the stock has declined over 20% YTD due to mounting uncertainties.
The company's success stems largely from AI-driven demand, with high-performance computing representing 59% of revenue. Advanced chip technologies (7nm and below) contributed 73% of wafer revenue, while CEO C.C. Wei noted robust demand for 3nm and 5nm chips.
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However, geopolitical tensions present significant challenges. Trump's proposed reciprocal tariffs could impose up to 32% levies on Taiwanese imports, while potential AI chip export restrictions threaten TSMC's relationships with key clients like Nvidia and AMD.
In response, TSMC is investing heavily in U.S. expansion, committing an additional $100 billion beyond its existing $65 billion pledge for three plants. The company has already begun U.S. production of Nvidia's Blackwell chips at its Arizona facility, though C.C. Wei dismissed rumors of an Intel joint venture.
Key investment considerations:
- Strong AI-driven growth fundamentals
- Expanding U.S. manufacturing presence
- Potential margin pressure from U.S. expansion
- Ongoing geopolitical risks
- Export restriction concerns
- Client diversification efforts
While TSMC maintains its position as the global leader in AI chip manufacturing, investors should monitor regulatory developments, client relationships, and the company's ability to maintain pricing power during global expansion. The stock represents a compelling long-term growth opportunity, but expect continued short-term volatility due to geopolitical factors.