Compare Texas Instruments Incorporated (TXN) 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 Texas Instruments Incorporated (TXN) a "Buy" — based on 65 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 Texas Instruments Incorporated at 38.9x. On forward P/E, Taiwan Semiconductor Manufacturing Company Limited is actually cheaper at 0.8x.

Over the past 5 years, Taiwan Semiconductor Manufacturing Company Limited (TSM) delivered a total return of +196.8%, compared to +33.5% for Texas Instruments Incorporated (TXN). 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 TXN's +373.7%. 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), Texas Instruments Incorporated (TXN) is the lower-risk stock at 1.29β versus Taiwan Semiconductor Manufacturing Company Limited's 1.44β — meaning TSM is approximately 12% more volatile than TXN 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 86% for Texas Instruments Incorporated — 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 28.3% for Texas Instruments Incorporated — 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 34.1% for TXN. At the gross margin level — before operating expenses — TSM leads at 59.9%, 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.

On forward earnings alone, Taiwan Semiconductor Manufacturing Company Limited (TSM) trades at 0.8x forward P/E versus 33.0x for Texas Instruments Incorporated — 32.2x 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. Texas Instruments Incorporated (TXN) offers the highest yield at 2.6%, 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). Both have compounded well over 10 years (TSM: +1552%, TXN: +373.7%), 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.