Chipmaking Giant Powers Ahead: Why Taiwan Semiconductor Stock and Related ETFs Are Capturing Investor Interest

Stellar Q3 Results Signal Sustained AI Momentum

The semiconductor sector just received a major catalyst. Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s leading contract chipmaker, disclosed its third-quarter financial results on October 16, 2025, with profits soaring 39.1% year-over-year—a notable beat that shattered previous records. The company’s revenue reached NT$989.92 billion, outpacing the NT$977.46 billion consensus estimate, while net income of NT$452.3 billion decisively topped the forecasted NT$417.69 billion.

What makes this performance particularly significant is management’s aggressive posture on 2025 guidance. TSMC now anticipates full-year revenue growth in the mid-30% range, marking the second upward revision in as many quarters. This confidence stems directly from the artificial intelligence revolution. CEO C.C. Wei emphasized on the earnings call that “recent developments in AI market continue to be very positive,” highlighting how expanding consumer adoption of AI applications has triggered explosive demand for advanced computation capabilities. As a primary supplier of cutting-edge AI processors for major tech companies, TSMC finds itself perfectly positioned to capitalize on this structural shift.

Market Recognition Reflected in Stock Momentum

Investors have clearly taken notice. Over the past six months, TSMC stock has appreciated 75%—substantially outpacing the S&P 500’s 26% gain during the same period. This stellar performance has lifted the company’s valuation to $1.56 trillion in market capitalization, cementing its status as a critical player in the global technology ecosystem.

Interestingly, despite this impressive run, valuation multiples remain reasonable. The stock trades at a trailing price-to-earnings ratio of 34.74X, only marginally above the semiconductor industry average of 29.72X. The price-to-book ratio stands at 10.53X (versus 9.70X industry-wide), while the price-to-cash-flow metric registers 27.87X against the 25.67X benchmark. This suggests the market has room to reward continued strong execution.

Geopolitical Risks Could Ease

A secondary tailwind may be emerging on the policy front. TSMC executives have indicated ongoing monitoring of potential U.S. tariffs on semiconductors as Washington debates reciprocal trade rates and industry-specific duties. However, the company appears well-positioned to negotiate favorable treatment given its substantial capital commitments to domestic U.S. manufacturing facilities, which could potentially insulate it from the harshest trade barriers.

Gaining Exposure Through Semiconductor ETFs

For investors seeking diversified exposure to TSMC without holding the stock outright, several semiconductor-heavy exchange-traded funds merit consideration. The SP Funds S&P World (ex-US) ETF (SPWO) carries an 15% allocation to TSMC, while the SP Funds S&P Global Technology ETF (SPTE) dedicates 11.58% of its portfolio to the chipmaker. Among emerging markets-focused vehicles, the Global X Emerging Markets Great Consumer ETF (EMC) holds an 11.83% weight in TSMC. For those seeking technology sector upside, the AXS Esoterica NextG Economy ETF (WUGI) maintains a 10.3% position, and the VanEck Semiconductor ETF (SMH) allocates 10.2% to the company.

These funds provide flexible entry points for capital seeking to participate in both TSMC’s structural growth narrative and the broader semiconductor sector renaissance being driven by artificial intelligence infrastructure buildout.