Taiwan Semiconductor Manufacturing (TSM -1.98%) has a big event coming on Oct. 15: its Q3 earnings. However, the cat is already out of the bag: Taiwan Semiconductor is going to post a great quarter. How do I know this? The company reports monthly revenue results, so investors already have a preview of what's coming.
Although it may be a major spoiler for what Taiwan Semiconductor will say shortly, I think the results are conclusive enough that investors should consider buying the stock now, as the results are truly incredible.
Image source: The Motley Fool.
Taiwan Semiconductor has delivered huge growth already
During July, August, and September, Taiwan Semiconductor delivered the following revenue growth rates:
| Month | Year-Over-Year Growth |
|---|---|
| July | 44.7% |
| August | 53.3% |
| September | 54.6% |
Data source: Taiwan Semiconductor.
So, not only is Taiwan Semiconductor's monthly revenue growth rate strong, but it's also accelerating. And the latest one will easily top all of the past few quarters.
TSM Revenue (Quarterly YoY Growth) data by YCharts
Wall Street analysts are in agreement with TSMC's accelerating growth rate, as they forecast 47% revenue growth in Q3 and 54% in Q4. That accelerating growth rate is a big deal and showcases that TSMC is among the best investments anyone can make in the AI realm.
However, not all of that growth is accounted for in Taiwan Semiconductor's stock price. Taiwan Semiconductor trades at a pretty reasonable 27 times forward earnings, which is far cheaper than where many other AI stocks trade.
TSM PE Ratio (Forward) data by YCharts
Competitor Intel trades for nearly 70 times forward earnings, while one of its major clients, AMD, trades for about 80 times forward earnings. Neither one of these two is growing at a rate that's that much different than TSMC (Intel is growing far slower), so Taiwan Semiconductor's stock price really isn't all that expensive.
NYSE: TSM
Key Data Points
That could set it up for a major jump following earnings if it boosts its outlook to a level that prompts the market to reprice the stock. Furthermore, if TSMC hints that 2027's growth could be just as fast as, or even faster than, 2026's, the stock could be primed to soar, as Wall Street has only penciled in a 36% growth rate for next year. I think its true growth will be closer to the mid-40% range it saw this year, as the AI build-out is only going to intensify next year. As a result, Taiwan Semiconductor is a superb stock to buy before it reports earnings.
