ARM vs TSM Stock Comparison: AI Score, Valuation, Performance and Upside
Arm and TSMC sit at two different, complementary layers of the semiconductor value chain: Arm licenses the chip architecture used to design processors, earning high-margin royalties, while TSMC actually manufactures the physical chips for nearly every major fabless designer, including those built on Arm's architecture. Both benefit from rising global chip volumes and AI-driven demand, but through very different business models and risk profiles.
Arm offers an extremely high-margin, asset-light way to benefit from rising chip complexity and volume across smartphones, data centers, and AI, while TSMC offers direct exposure to the physical manufacturing capacity that the entire industry depends on, at the cost of far higher capital intensity and geopolitical concentration risk. Consider whether you prefer licensing economics or manufacturing scale as your way into the AI chip supply chain.
TSM holds the edge across 5 of 5 key metrics in this comparison. TSM leads on both 1-year return (+61.09%) and forward P/E quality (19.05x vs 79.87x for ARM), a relatively favorable combination of momentum and valuation. TSM leads on both revenue growth (36.00%) and operating margin (60.34%), suggesting a stronger fundamental setup on both dimensions. Analyst consensus implies meaningfully more upside for TSM (+32.21%) than for ARM (+18.33%).
Human Wall Street analysts' price targets, typically implying a ~12-month view — a separate signal from this site's own AI Prediction Signal further down the page, which is a 5-/30-day machine-learning forecast based on price history alone.
- Want an asset-light, high-margin way to benefit from rising global chip volumes and complexity
- Believe royalty rate expansion from AI and data center chip adoption will keep growing per-chip revenue
- Prefer lower direct geopolitical concentration risk than a Taiwan-based manufacturer
- Are comfortable with revenue indirectly tied to broader semiconductor unit cycles
- Want direct exposure to the physical manufacturing capacity that the entire AI chip industry depends on
- Believe leading-edge manufacturing will remain a durable moat given the difficulty of replicating TSMC's scale
- Are comfortable with Taiwan-concentration geopolitical risk in exchange for market-leading positioning
- Prefer a business with enormous scale and near-universal customer dependency across the chip industry
| Metric | ARM | TSM |
|---|---|---|
| AI scorei | 51.6 | 78.6 |
| AI ranki | #445 | #17 |
| Latest closei | $243.98 | $417.72 |
| 1M returni | -10.11% | -2.81% |
| 6M returni | +90.07% | +23.63% |
| 1Y returni | +58.58% | +61.09% |
How much would $10,000 be worth today if invested at the start of each period, with all dividends reinvested?
| Period | ARM | TSM |
|---|---|---|
| 1Y ago | $15.86K (+58.6%) started 2025-09-16 | $16.33K (+63.3%) started 2025-09-16 |
| 5Y ago | $38.37K (+283.7%) started 2023-09-14 | $40.89K (+308.9%) started 2021-09-16 |
| 10Y ago | $38.37K (+283.7%) started 2023-09-14 | $235.8K (+2258.0%) started 2016-09-16 |
Hypothetical — past performance does not guarantee future results.
| Metric | ARM | TSM |
|---|---|---|
| Market capi | $260.57B | $2.17T |
| Trailing P/Ei | 248.96 | 31.06 |
| Forward P/Ei | 79.87 | 19.05 |
| Price/Salesi | 50.54 | 0.49 |
| EV/Revenuei | 49.88 | 3.36 |
| Analyst targeti | $288.71 | $552.26 |
| Target upsidei | +18.33% | +32.21% |
| Metric | ARM | TSM |
|---|---|---|
| Revenue growthi | 22.40% | 36.00% |
| Earnings growthi | 108.30% | 77.40% |
| EPS growthi | +108.30% | +77.40% |
| FCF margini | +25.88% | +16.46% |
| Operating margini | 7.60% | 60.34% |
| Profit margini | 20.25% | 49.92% |
| ROIC proxyi | 13.35% | 39.97% |
| Return on equityi | 13.35% | 39.97% |
| Dividend yieldi | 0.00% | 0.97% |
| Payout ratioi | 0.00% | 25.74% |
| Dividend growth streaki | N/A | 2 yrs |
| Betai | 3.89 | 1.25 |
| Debt/equityi | 5.62 | 16.50 |
| Current ratioi | 5.25 | 2.46 |
| Quick ratioi | 5.06 | 2.13 |
Over the past year, ARM and TSM have moved moderately in the same direction (correlation of 0.59), based on daily returns.
Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.
| Period | Metric | ARM | TSM |
|---|---|---|---|
| 1Y | Growthi | +58.58% | +61.09% |
| CAGRi | +58.63% | +61.14% | |
| Volatilityi | 76.53% | 40.36% | |
| Sharpe ratioi | 0.92 | 1.28 | |
| Sortino ratioi | 1.52 | 1.95 | |
| Max drawdowni | 48.83% | 21.55% | |
| Current drawdowni | 44.48% | 12.30% | |
| Avg drawdowni | 23.00% | 5.81% | |
| Ulcer Indexi | 27.37% | 7.64% | |
| Max daily dropi | 12.84% | 6.98% | |
| Max wkly dropi | 25.35% | 11.05% | |
| 5Y | Growthi | +283.68% | +274.63% |
| CAGRi | +56.41% | +30.24% | |
| Volatilityi | 76.61% | 38.40% | |
| Sharpe ratioi | 0.90 | 0.77 | |
| Sortino ratioi | 1.49 | 1.16 | |
| Max drawdowni | 53.97% | 56.47% | |
| Current drawdowni | 44.48% | 12.30% | |
| Avg drawdowni | 22.48% | 17.74% | |
| Ulcer Indexi | 25.66% | 23.32% | |
| Max daily dropi | 19.46% | 13.33% | |
| Max wkly dropi | 30.98% | 16.17% | |
| 10Y | Growthi | +283.68% | +1722.31% |
| CAGRi | +56.41% | +33.68% | |
| Volatilityi | 76.61% | 34.81% | |
| Sharpe ratioi | 0.90 | 0.88 | |
| Sortino ratioi | 1.49 | 1.33 | |
| Max drawdowni | 53.97% | 56.47% | |
| Current drawdowni | 44.48% | 12.30% | |
| Avg drawdowni | 22.48% | 12.88% | |
| Ulcer Indexi | 25.66% | 18.07% | |
| Max daily dropi | 19.46% | 14.03% | |
| Max wkly dropi | 30.98% | 16.17% |
| Category | ARM | TSM |
|---|---|---|
| Company | Arm Holdings plc | Taiwan Semiconductor Manufacturing Company |
| Sector | Technology | Technology |
| Industry | Semiconductors | Semiconductors |
| Core business | Licenses CPU architecture and designs used in the vast majority of the world's smartphones, and increasingly in data center, automotive, and AI chips, earning revenue through licensing fees and per-chip royalties. | The world's largest dedicated semiconductor foundry, manufacturing chips designed by nearly every major fabless chip company, including the most advanced AI accelerators and mobile processors. |
| Investor focus | Royalty rate expansion (per-chip revenue increasing as customers adopt newer Arm architectures), data center and AI chip design wins, and licensing revenue growth. | Leading-edge node capacity utilization, AI-related chip demand, capital expenditure for new fabs, and geopolitical risk given its Taiwan concentration. |
- Asset-light licensing and royalty business model with very high gross margins
- Architecture embedded in nearly every smartphone and expanding into data center and automotive chips
- Royalty rates tend to increase as customers adopt newer, more advanced Arm architecture versions
- Dominant market share in leading-edge chip manufacturing, with few credible competitors at the most advanced nodes
- Essentially every major AI chip designer (NVIDIA, AMD, Apple, and others) depends on TSMC for manufacturing
- Long-term pricing power from being the default manufacturing partner for cutting-edge silicon
- Revenue tied to broader semiconductor unit volumes across its licensee base, making it indirectly cyclical
- Customer concentration among a handful of very large licensees (major smartphone and chip design companies)
- Competition from RISC-V, an open-source alternative architecture gaining adoption in some markets
- Geopolitical risk given its manufacturing concentration in Taiwan and US-China technology tensions
- Massive, sustained capital expenditure requirements to build and maintain leading-edge fab capacity
- Customer concentration among a small number of very large fabless chip designers
Want deeper AI forecasts?
This comparison page is public and free forever. Subscribers can unlock saved watchlists, full AI rankings, detailed forecasts, and interactive analysis tools.
Full valuation workup with AI Score, Monte Carlo forecast, and bull/bear case — free preview, premium data from $3.99.