Broadcom Inc. (AVGO) and Taiwan Semiconductor Manufacturing Company Limited (TSM) are two titans in the semiconductor industry, driving innovation in technology hardware and chip manufacturing worldwide. Both companies serve overlapping markets such as high-performance computing and communications infrastructure, making their strategies and growth prospects highly comparable. In this article, I will analyze these industry leaders to reveal which stock holds the most promise for your investment portfolio.
Table of contents
Companies Overview
I will begin the comparison between Broadcom Inc. and Taiwan Semiconductor Manufacturing Company Limited by providing an overview of these two companies and their main differences.
Broadcom Inc. Overview
Broadcom Inc. is a global technology company specializing in semiconductor and infrastructure software solutions. Headquartered in Palo Alto, California, it operates through four segments: Wired Infrastructure, Wireless Communications, Enterprise Storage, and Industrial & Other. Broadcom’s products serve diverse markets, including data centers, telecommunications, smartphones, and industrial automation, employing approximately 37,000 people worldwide.
Taiwan Semiconductor Manufacturing Company Limited Overview
Taiwan Semiconductor Manufacturing Company Limited (TSMC) is a leading semiconductor manufacturer headquartered in Hsinchu City, Taiwan. Founded in 1987, TSMC produces integrated circuits and offers a variety of wafer fabrication processes. Its products support sectors such as high-performance computing, automotive, and consumer electronics. TSMC employs over 65,000 people and maintains a global presence with operations across Asia, Europe, and the Americas.
Key similarities and differences
Both Broadcom and TSMC operate within the semiconductor industry, serving global markets with advanced technology products. However, Broadcom focuses on semiconductor design and infrastructure software across multiple sectors, while TSMC primarily specializes in semiconductor manufacturing and wafer fabrication. Additionally, Broadcom is headquartered in the US with 37,000 employees, whereas TSMC is based in Taiwan with a significantly larger workforce of 65,000.
Income Statement Comparison
This table presents a side-by-side comparison of key income statement metrics for Broadcom Inc. and Taiwan Semiconductor Manufacturing Company Limited for their most recent fiscal years.
| Metric | Broadcom Inc. (AVGO) | Taiwan Semiconductor Manufacturing Company Limited (TSM) |
|---|---|---|
| Market Cap | 1.6T USD | 1.7T USD |
| Revenue | 63.9B USD | 2.89T TWD |
| EBITDA | 34.7B USD | 1.98T TWD |
| EBIT | 25.9B USD | 1.32T TWD |
| Net Income | 23.1B USD | 1.16T TWD |
| EPS | 4.91 USD | 223.4 TWD |
| Fiscal Year | 2025 | 2024 |
Income Statement Interpretations
Broadcom Inc.
Broadcom Inc. demonstrated strong revenue growth from 2021 to 2025, with a 133% increase, and net income surged by 243%. Margins have generally improved, with a gross margin of 67.77% and net margin at 36.2% in 2025, reflecting favorable profitability. The latest year showed accelerated EBIT growth of 87% and EPS growth near 288%, indicating significant margin expansion and operational efficiency.
Taiwan Semiconductor Manufacturing Company Limited
Taiwan Semiconductor Manufacturing Company Limited experienced steady revenue growth of 116% and net income rising 127% over 2020-2024. Margins remain robust, with a gross margin of 56.12%, EBIT margin of 45.68%, and a net margin of 40.02% in 2024. Growth moderated somewhat in net margin with only 1.58% improvement last year, though EPS advanced 36%, showing healthy earnings momentum amid stable cost control.
Which one has the stronger fundamentals?
Both companies exhibit favorable income statement fundamentals characterized by strong revenue and net income growth alongside solid margins. Broadcom shows more pronounced margin expansion and faster EPS growth, while Taiwan Semiconductor maintains higher EBIT and net margins with consistent profitability. The slight moderation in Taiwan Semiconductor’s net margin growth contrasts with Broadcom’s accelerated gains, highlighting nuanced strengths in each.
Financial Ratios Comparison
The table below presents a side-by-side comparison of key financial ratios for Broadcom Inc. (AVGO) and Taiwan Semiconductor Manufacturing Company Limited (TSM) based on their most recent fiscal year data.
| Ratios | Broadcom Inc. (AVGO) 2025 | Taiwan Semiconductor (TSM) 2024 |
|---|---|---|
| ROE | 28.45% | 27.29% |
| ROIC | 16.36% | 19.99% |
| P/E | 73.87 | 29.04 |
| P/B | 21.01 | 7.92 |
| Current Ratio | 1.71 | 2.36 |
| Quick Ratio | 1.58 | 2.14 |
| D/E | 0.80 | 0.25 |
| Debt-to-Assets | 38.07% | 15.65% |
| Interest Coverage | 7.94 | 126.0 |
| Asset Turnover | 0.37 | 0.43 |
| Fixed Asset Turnover | 25.25 | 0.88 |
| Payout Ratio | 48.18% | 31.34% |
| Dividend Yield | 0.65% | 1.08% |
Interpretation of the Ratios
Broadcom Inc.
Broadcom shows strong profitability with net margin at 36.2% and ROE at 28.45%, both favorable. Its liquidity ratios are solid, but high valuation multiples like a PE of 73.87 and PB of 21.01 raise concerns. The dividend yield is low at 0.65%, reflecting moderate shareholder returns with cautious distribution and buyback sustainability.
Taiwan Semiconductor Manufacturing Company Limited
TSMC exhibits robust profitability metrics, including a 40.02% net margin and 27.29% ROE, combined with strong liquidity and low debt levels. While valuation multiples remain elevated, the dividend yield at 1.08% is neutral, indicating balanced shareholder returns supported by solid cash flow and prudent capital management.
Which one has the best ratios?
TSMC presents a more favorable overall ratio profile, with a higher percentage of favorable metrics, lower debt, and better liquidity than Broadcom. Although both face high valuation multiples and some unfavorable turnover ratios, TSMC’s stronger capital structure and balanced dividend yield give it a slight edge in ratio quality.
Strategic Positioning
This section compares the strategic positioning of Broadcom Inc. and Taiwan Semiconductor Manufacturing Company Limited, including market position, key segments, and exposure to technological disruption:
Broadcom Inc.
- Large market cap with competitive pressure in semiconductors and infrastructure software sectors.
- Operates diversified segments: Infrastructure Software and Semiconductor Solutions drive revenue growth.
- Faces technological disruption from advances in semiconductor design and infrastructure software innovation.
Taiwan Semiconductor Manufacturing Company Limited
- Largest market cap in semiconductor foundry with global manufacturing footprint and competitive pressure.
- Focused primarily on wafer fabrication and other semiconductor products with broad geographic exposure.
- Exposure to technological disruption from evolving wafer fabrication processes and semiconductor tech advances.
Broadcom Inc. vs Taiwan Semiconductor Manufacturing Company Limited Positioning
Broadcom demonstrates a diversified business model spanning software and semiconductor solutions, providing multiple revenue streams. TSM focuses on wafer fabrication and semiconductor manufacturing, concentrating on core technology processes. Broadcom’s diversification reduces segment risk, while TSM’s specialization targets scale and manufacturing expertise.
Which has the best competitive advantage?
Broadcom shows a very favorable moat with growing ROIC exceeding WACC by over 7%, indicating durable competitive advantage and increasing profitability. TSM also creates value with ROIC above WACC but faces a declining ROIC trend, resulting in a slightly favorable moat status.
Stock Comparison
The stock price performance over the past 12 months reveals significant gains for both Broadcom Inc. and Taiwan Semiconductor Manufacturing Company Limited, with contrasting recent momentum and trading dynamics shaping investor sentiment.
Trend Analysis
Broadcom Inc. (AVGO) exhibited a bullish trend over the past year with a 162.18% price increase, despite recent deceleration and a short-term decline of 8.05% from November 2025 to January 2026. Taiwan Semiconductor Manufacturing Company Limited (TSM) also showed a bullish trend with a 152.54% rise, featuring accelerating momentum and an 8.88% gain over the same recent period. Comparing the two, Broadcom delivered the highest overall market performance, though TSM’s recent acceleration contrasts with AVGO’s short-term weakening.
Target Prices
The current analyst consensus indicates promising upside potential for both Broadcom Inc. and Taiwan Semiconductor Manufacturing Company Limited.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Broadcom Inc. | 510 | 370 | 454.8 |
| Taiwan Semiconductor Manufacturing Company Limited | 400 | 330 | 361.25 |
Analysts expect Broadcom’s stock to trade significantly above its current price of $339.89, while Taiwan Semiconductor’s consensus target also suggests moderate upside from its current $327.11 level.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Broadcom Inc. (AVGO) and Taiwan Semiconductor Manufacturing Company Limited (TSM):
Rating Comparison
AVGO Rating
- Rating: B, classified as Very Favorable by analysts.
- Discounted Cash Flow Score: Moderate at 3, indicating average valuation.
- ROE Score: Very Favorable at 5, showing excellent profit generation efficiency.
- ROA Score: Very Favorable at 5, indicating effective asset utilization.
- Debt To Equity Score: Very Unfavorable at 1, signaling high financial risk.
- Overall Score: Moderate at 3, reflecting a middling overall financial standing.
TSM Rating
- Rating: A-, also considered Very Favorable by analysts.
- Discounted Cash Flow Score: Very Favorable at 5, suggesting strong future cash flow prospects.
- ROE Score: Very Favorable at 5, also demonstrating excellent efficiency in generating profits.
- ROA Score: Very Favorable at 5, reflecting effective use of assets.
- Debt To Equity Score: Moderate at 3, indicating balanced financial leverage.
- Overall Score: Favorable at 4, suggesting stronger overall financial health.
Which one is the best rated?
TSM is better rated than AVGO based on the provided data, with a higher overall score (4 vs. 3) and stronger discounted cash flow and debt-to-equity scores. Both have excellent ROE and ROA scores, but TSM’s balanced financial risk improves its standing.
Scores Comparison
Here is a comparison of the Altman Z-Score and Piotroski Score for Broadcom Inc. and Taiwan Semiconductor Manufacturing Company Limited:
Broadcom Inc. Scores
- Altman Z-Score: 12.13, indicating a safe zone with very low bankruptcy risk.
- Piotroski Score: 8, categorized as very strong financial health.
Taiwan Semiconductor Manufacturing Company Limited Scores
- Altman Z-Score: 2.94, in the grey zone, indicating moderate bankruptcy risk.
- Piotroski Score: 8, categorized as very strong financial health.
Which company has the best scores?
Broadcom shows a significantly higher Altman Z-Score, placing it firmly in the safe zone, while TSM is in the grey zone. Both companies share the same very strong Piotroski Score of 8, reflecting similar financial strength.
Grades Comparison
Here is the grades comparison for Broadcom Inc. and Taiwan Semiconductor Manufacturing Company Limited:
Broadcom Inc. Grades
The table below summarizes recent grades assigned by reputable financial firms for Broadcom Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Mizuho | Maintain | Outperform | 2026-01-09 |
| Truist Securities | Maintain | Buy | 2025-12-19 |
| UBS | Maintain | Buy | 2025-12-15 |
| Benchmark | Maintain | Buy | 2025-12-12 |
| Rosenblatt | Maintain | Buy | 2025-12-12 |
| Piper Sandler | Maintain | Overweight | 2025-12-12 |
| TD Cowen | Maintain | Buy | 2025-12-12 |
| B of A Securities | Maintain | Buy | 2025-12-12 |
| JP Morgan | Maintain | Overweight | 2025-12-12 |
| Mizuho | Maintain | Outperform | 2025-12-12 |
Broadcom’s grades consistently show strong buy-side sentiment, with multiple firms maintaining Buy, Outperform, and Overweight ratings.
Taiwan Semiconductor Manufacturing Company Limited Grades
The table below lists recent grades assigned by well-known analysts for Taiwan Semiconductor Manufacturing Company Limited:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Bernstein | Maintain | Outperform | 2025-12-08 |
| Needham | Maintain | Buy | 2025-10-27 |
| Barclays | Maintain | Overweight | 2025-10-17 |
| Needham | Maintain | Buy | 2025-10-16 |
| Susquehanna | Maintain | Positive | 2025-10-10 |
| Barclays | Maintain | Overweight | 2025-10-09 |
| Barclays | Maintain | Overweight | 2025-09-16 |
| Needham | Maintain | Buy | 2025-07-17 |
| Susquehanna | Maintain | Positive | 2025-07-14 |
| Needham | Maintain | Buy | 2025-07-01 |
TSMC’s grades reveal a steady pattern of buy-side recommendations, featuring frequent Buy, Overweight, and Outperform ratings from established firms.
Which company has the best grades?
Both Broadcom Inc. and Taiwan Semiconductor Manufacturing Company Limited have strong buy-side consensus, but Broadcom has a larger number of Buy ratings (52 vs. 16) and repeated Outperform designations. This suggests a slightly stronger positive sentiment among analysts for Broadcom, which may influence investor confidence and portfolio decisions accordingly.
Strengths and Weaknesses
Below is a comparative table outlining the strengths and weaknesses of Broadcom Inc. (AVGO) and Taiwan Semiconductor Manufacturing Company Limited (TSM) based on the latest financial and strategic data.
| Criterion | Broadcom Inc. (AVGO) | Taiwan Semiconductor Manufacturing Company (TSM) |
|---|---|---|
| Diversification | Strong diversification between Infrastructure Software (27B USD) and Semiconductor Solutions (37B USD) segments | Primarily focused on wafer manufacturing with a smaller other products segment; less diversified |
| Profitability | High net margin (36.2%) and ROIC (16.36%), with a very favorable economic moat and growing ROIC trend | Even higher net margin (40.02%) and ROIC (20%), but ROIC trend is declining, indicating potential future pressure |
| Innovation | Demonstrates durable competitive advantage with strong investment in infrastructure software and semiconductor solutions | Leading semiconductor foundry with cutting-edge wafer technology but faces margin pressure and declining ROIC |
| Global presence | Extensive global footprint in software and semiconductor markets | Global leader in semiconductor manufacturing with strong presence in Asia and international customers |
| Market Share | Leading in semiconductor solutions and infrastructure software markets | Dominant market share in semiconductor wafer foundry industry |
Broadcom excels in diversification and sustained profitability with a growing ROIC, indicating robust value creation. TSM maintains higher profitability but faces challenges from a declining ROIC trend, signaling the need for cautious monitoring of future growth and innovation. Both companies have a strong global presence and market leadership in their respective fields.
Risk Analysis
Below is a comparative overview of key risks for Broadcom Inc. (AVGO) and Taiwan Semiconductor Manufacturing Company Limited (TSM) based on the most recent data:
| Metric | Broadcom Inc. (AVGO) | Taiwan Semiconductor (TSM) |
|---|---|---|
| Market Risk | Beta 1.218, high P/E and P/B ratios indicate valuation sensitivity | Beta 1.274, lower P/E and P/B but still moderately high valuation risk |
| Debt level | Debt-to-Equity 0.8 (neutral), interest coverage favorable at 8.08 | Debt-to-Equity 0.25 (favorable), very strong interest coverage at 125.96 |
| Regulatory Risk | US tech sector regulations, export controls | Geopolitical tensions involving Taiwan, export restrictions risk |
| Operational Risk | Complex product lines, high fixed asset turnover | High dependence on advanced foundry processes, supply chain sensitivity |
| Environmental Risk | Exposure to energy consumption and electronic waste regulations | Similar environmental challenges due to semiconductor manufacturing |
| Geopolitical Risk | Moderate, tied to US-China trade policies | High, due to Taiwan-China relations and global supply chain impact |
Broadcom’s valuation risks and moderate debt level warrant caution, while TSM faces significant geopolitical risks due to its location but maintains a stronger balance sheet and operational resilience. Market volatility and geopolitical tensions remain the most impactful risks for investors.
Which Stock to Choose?
Broadcom Inc. (AVGO) has demonstrated strong income growth with a 23.87% revenue increase in 2025 and favorable profitability metrics, including a 36.2% net margin and 28.45% ROE. Its debt levels are moderate, and the overall rating is very favorable, supported by a very favorable moat indicating durable competitive advantage.
Taiwan Semiconductor Manufacturing Company Limited (TSM) shows a robust 33.89% revenue growth in 2024 with solid profitability; net margin stands at 40.02% and ROE at 27.29%. It maintains low debt and a very favorable rating, although its moat is slightly favorable due to a declining ROIC trend despite value creation.
For investors seeking durable competitive advantage and rapidly improving profitability, Broadcom’s strong moat and income growth could be appealing, while Taiwan Semiconductor’s solid fundamentals and favorable rating might suit those valuing financial stability despite a slight ROIC decline; preferences may depend on risk tolerance and investment strategy.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Broadcom Inc. and Taiwan Semiconductor Manufacturing Company Limited to enhance your investment decisions:
