Why is Taiwan Semiconductor Manufacturing Company Limited stock underperforming the market?

Taiwan Semiconductor Manufacturing Co. (TSM) has shown robust financial performance with a revenue growth rate of 38.95% as of September 30, 2024, and a net margin of 42.81%. The company's debt-to-equity ratio is 0.23, which is favorable compared to the industry average. Analysts have increased their price targets, with an average target of $233.75, up 6.25% from the previous $220.00. TSM projects 2025 revenue growth in the mid-20s percent range, driven by AI and advanced nodes, with AI revenue expected to double in 2025 after tripling in 2024. The company anticipates a mid-40% compound annual growth rate for AI revenue through 2029. For 2025, TSM plans capital expenditures between $38 billion and $42 billion, focusing on advanced nodes and other technologies, with 70% allocated to advanced nodes. The company's advancements in silicon photonics and COUPE technology have been recognized. Analysts maintain positive ratings, with Charles Shi from Needham and Bruce Lu from Goldman Sachs both reiterating Buy ratings with price targets of $225 and $254, respectively. Despite strong market presence and strategic investments, TSM faces challenges from potential U.S. capacity expansion and geopolitical tensions that could affect future performance.