Compare Analog Devices, Inc. (ADI) vs Taiwan Semiconductor Manufacturing Company Limited (TSM) Stock

Taiwan Semiconductor Manufacturing Company Limited (TSM) offers the better valuation at 35.1x trailing P/E (0.8x forward), making it the more compelling value choice. Analysts rate Analog Devices, Inc. (ADI) a "Buy" — based on 54 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.

On trailing P/E, Taiwan Semiconductor Manufacturing Company Limited (TSM) is the cheapest at 35.1x versus Analog Devices, Inc. at 78.0x. On forward P/E, Taiwan Semiconductor Manufacturing Company Limited is actually cheaper at 0.8x. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: Taiwan Semiconductor Manufacturing Company Limited wins at 0.03x versus Analog Devices, Inc.'s 4.62x — a PEG below 1.0 traditionally signals the market is underpricing earnings growth.

Over the past 5 years, Taiwan Semiconductor Manufacturing Company Limited (TSM) delivered a total return of +196.8%, compared to +134.6% for Analog Devices, Inc. (ADI). A $10,000 investment in TSM five years ago would be worth approximately $30K today (assuming dividends reinvested). Over 10 years, the gap is even starker: TSM returned +1552% versus ADI's +621.4%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.

By beta (market sensitivity over 5 years), Taiwan Semiconductor Manufacturing Company Limited (TSM) is the lower-risk stock at 1.44β versus Analog Devices, Inc.'s 1.55β — meaning ADI is approximately 7% more volatile than TSM relative to the S&P 500. On balance sheet safety, Taiwan Semiconductor Manufacturing Company Limited (TSM) carries a lower debt/equity ratio of 18% versus 26% for Analog Devices, Inc. — giving it more financial flexibility in a downturn.

Taiwan Semiconductor Manufacturing Company Limited (TSM) is the more profitable company, earning 45.1% net margin versus 20.6% for Analog Devices, Inc. — meaning it keeps 45.1% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: TSM leads at 50.8% versus 26.6% for ADI. At the gross margin level — before operating expenses — ADI leads at 61.5%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.

The PEG ratio (forward P/E divided by expected earnings growth rate) is the most precise measure of undervaluation relative to growth potential. By this metric, Taiwan Semiconductor Manufacturing Company Limited (TSM) is the more undervalued stock at a PEG of 0.03x versus Analog Devices, Inc.'s 4.62x. A PEG below 1.0 is traditionally considered the threshold for growth-adjusted undervaluation. On forward earnings alone, Taiwan Semiconductor Manufacturing Company Limited (TSM) trades at 0.8x forward P/E versus 31.5x for Analog Devices, Inc. — 30.7x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for TSM: 8.9% to $408.00.

All stocks in this comparison pay dividends. Analog Devices, Inc. (ADI) offers the highest yield at 1.1%, versus 0.8% for Taiwan Semiconductor Manufacturing Company Limited (TSM).

For long-horizon retirement investors, Taiwan Semiconductor Manufacturing Company Limited (TSM) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (0.8% yield, +1552% 10Y return). Analog Devices, Inc. (ADI) carries a higher beta of 1.55 — meaning larger drawdowns in market downturns, which matters significantly when you cannot wait years for a recovery. Both have compounded well over 10 years (TSM: +1552%, ADI: +621.4%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.

Both stocks operate in the Technology sector, making this a peer-level intra-sector comparison — the same macro tailwinds and headwinds will affect both. These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.