Should You Buy Broadcom Stock Instead of Taiwan Semiconductor Stock? | AVGO vs. TSM

Parkev Tatevosian, CFA•Sep 2, 2026

Summary

Parkev performs a head-to-head comparison between Broadcom and Taiwan Semiconductor Manufacturing Company (TSM), highlighting how both have benefited significantly from the surge in demand for artificial intelligence infrastructure. Both companies have seen massive revenue growth since 2017 and have successfully expanded their profit margins, though their future margin trajectories differ due to geographic and segment-mix shifts. Parkev notes that while Broadcom operates an asset-light model and TSM requires massive capital expenditures, both maintain returns on invested capital that exceed their weighted average cost of capital, indicating strong value creation for shareholders.

Taiwan Semiconductor Manufacturing Company (TSM): Parkev highlights TSM's dominant position as a manufacturer, noting it is essentially sold out for the next few years. Despite high capital requirements, its return on invested capital is an impressive 34%, and Parkev estimates a 49% upside from current levels, valuing the stock at $620 per share.

Broadcom: Parkev emphasizes the company's successful integration of the VMware acquisition and its strong backlog of new deals. Despite a lower return on invested capital of 20% compared to TSM, Parkev calculates a potential upside of 48% with a fair value estimate of $547 per share, suggesting the stock is currently undervalued.

Comparison: Parkev points out that both stocks trade at very similar forward price-to-earnings ratios (roughly 19x), making the decision between them highly competitive. Although Parkev owns Broadcom, Parkev concludes that if making a purchase today, TSM offers the slightly more favorable outlook for investors.

Mentioned Stocks

AVGO

Sentiment: BUY

Reasoning: Parkev notes that Broadcom is a strong investment with a fair value estimate of $547 and a potential 48% upside. While Parkev already owns the stock, the analyst considers it a solid choice, though currently ranks it slightly behind TSM.

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TSM

Sentiment: BUYAction: RECOMMENDED

Reasoning: Parkev recommends TSM as the slightly better buy over Broadcom today due to its 34% return on invested capital and an estimated 49% upside potential from the current price of $416 to a fair value of $620 per share.

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