One way to appreciate just how dependent the AI buildout is on TSMC's output: Nvidia's operating margin sits at 65.6% with revenue growth of 85.2% year-over-year (as of 2026-08-08, per SignalPlay fundamentals). A fabless model only generates numbers like that when your foundry partner delivers consistent, high-yield production at scale. Any meaningful yield slip at TSMC would hit Nvidia's margin profile faster than most investors model.
The EV/FCF versus EV/EBITDA gap of 58x against 25x on the same company, is the same distortion we’ve seen with Alphabet and Meta as well, just showing up in a different ratio. Capex up 41% against operating cash flow up 12% means free cash flow is absorbing the entire cost of a buildout that hasn’t finished paying off yet, so any cash-based multiple looks temporarily broken while the accrual-based one stays honest. The ROIC and ROCE numbers you pulled, above 40% and near 30%, are the real tell that the spend is still earning its keep despite the FCF multiple screaming expensive.
My DCF workings suggest TSM is fairly valued. EBIT is very similar with your table, but I think you are overestimating Exit multiple - 25 for base case is too much.
One way to appreciate just how dependent the AI buildout is on TSMC's output: Nvidia's operating margin sits at 65.6% with revenue growth of 85.2% year-over-year (as of 2026-08-08, per SignalPlay fundamentals). A fabless model only generates numbers like that when your foundry partner delivers consistent, high-yield production at scale. Any meaningful yield slip at TSMC would hit Nvidia's margin profile faster than most investors model.
The EV/FCF versus EV/EBITDA gap of 58x against 25x on the same company, is the same distortion we’ve seen with Alphabet and Meta as well, just showing up in a different ratio. Capex up 41% against operating cash flow up 12% means free cash flow is absorbing the entire cost of a buildout that hasn’t finished paying off yet, so any cash-based multiple looks temporarily broken while the accrual-based one stays honest. The ROIC and ROCE numbers you pulled, above 40% and near 30%, are the real tell that the spend is still earning its keep despite the FCF multiple screaming expensive.
My DCF workings suggest TSM is fairly valued. EBIT is very similar with your table, but I think you are overestimating Exit multiple - 25 for base case is too much.