Here Is the 1 Dirt-Cheap Semiconductor Titan I Keep Loading Up on Repeat

The post Here Is the 1 Dirt-Cheap Semiconductor Titan I Keep Loading Up on Repeat appeared first on 24/7 Wall St..

I keep buying Taiwan Semiconductor and I am not going to stop, because every dip the market hands me looks like a gift I refuse to refuse. Taiwan Semiconductor Manufacturing (NYSE:TSM) is the one foundry that virtually every advanced chip designer on earth has to call before they can ship silicon, and I am tired of pretending that fact is priced in. When Reddit panicked on June 8, sending sentiment to a score of 28 on the highest activity day in the dataset, I added again. I will keep adding.

The thesis is simple. This is a cash-compounding machine wearing a cyclical costume. The bears spent months arguing that CoWoS packaging constraints would cap near-term upside, and the response from management was to pour concrete. C.C. Wei was direct on the Q1 call: “AI-related demand continues to be extremely robust” and “we have to speed it up with our buildup of clean room and buying the tools.” The same call laid out three new N3 fabs across Taiwan, Arizona, and Japan, with N2 already in high-volume manufacturing as of Q4 2025 with good yield. That is the moat widening in real time.

Now the data. Q2 2026 revenue printed NT$1.134 trillion, up 21.45% YoY, with net income of NT$572.8 billion, up 43.82% YoY. Earnings have beaten the consensus for eight straight quarters, most recently topping estimates by 8.39% in Q1 2026 with reported EPS of $3.49. Trailing twelve-month EPS sits at $11.62, return on equity at 36.2%, and operating margin at 58.1%. The forward P/E of 27x against management’s own “above 30%” full-year 2026 revenue growth in U.S. dollar terms is the dirt-cheap part of the headline. Compare that to the semiconductor sector ETF (SOXX), which has run 96.54% year-to-date while TSM has lagged at 40.83% YTD. The pure-play foundry is the cheapest seat in the cleanest theater.

The capital return reinforces the case. Q1 2026 earnings appropriations sent NT$155.6 billion in cash dividends to shareholders, with the next dividend dated October 8, 2026. The U.S. investment tax credit for the Arizona fab also stepped up to 35% from 25%, effective January 2026, which is a direct subsidy to my future free cash flow.

Now the risk I will not wave away. Taiwan exposure is real. Top 10 customers account for 84% of accounts receivable, and Q1 2025 absorbed roughly $5.30 billion in earthquake-related losses. Geopolitics across the strait does not sleep. What changes my mind is the geographic build: Arizona expanding, ESMC in Germany with subsidies, JASM in Japan with subsidies. The company is paying to spread the concentration that scares people, and customers are paying TSM to do it.

Forward conviction comes down to one observation. C.C. Wei said AI accelerator revenue is tracking a CAGR in the “higher 50s” through 2029, and 17 of 19 analysts rate it a buy with zero sells and a consensus target of $467.84. Every chip in the agentic AI build-out has to walk through this foundry’s door. I will keep buying the toll bridge while the rest of the market argues about the traffic.

The post Here Is the 1 Dirt-Cheap Semiconductor Titan I Keep Loading Up on Repeat appeared first on 24/7 Wall St..