TSMC: A Hidden AI Stock Giant
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy TSM?
Source: Fool
- Significant Revenue Growth: In 2025, TSMC's revenue increased by 36% in USD terms, with high-performance computing (HPC) revenue surging 48% and accounting for 58% of total revenue, highlighting its strong demand and market dominance in the AI chip sector.
- Improved Profitability: TSMC achieved a gross margin of 60% in 2025, expected to remain above 56% in the coming years, indicating robust pricing power and profitability amid soaring AI chip demand.
- Future Growth Expectations: TSMC anticipates nearly 30% revenue growth in 2026, with a projected CAGR approaching 25% from 2024 to 2029, reflecting its long-term growth potential in the AI market.
- Strategic Expansion Plans: TSMC plans to ramp up production of its 2nm chips in the second half of 2026 while expanding overseas plants in Japan, the U.S., and Europe to mitigate risks from potential Taiwan-China tensions, ensuring its competitive edge and supply chain security.
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Analyst Views on TSM
Wall Street analysts forecast TSM stock price to fall
8 Analyst Rating
7 Buy
1 Hold
0 Sell
Strong Buy
Current: 368.100
Low
63.24
Averages
313.46
High
390.00
Current: 368.100
Low
63.24
Averages
313.46
High
390.00
About TSM
Taiwan Semiconductor Manufacturing Co Ltd is a Taiwan-based integrated circuit foundry service provider. The Company is primarily engaged in integrated circuit manufacturing services. It offers advanced process technologies, specialised process solutions, advanced photomask and silicon stacking, and packaging-related technologies, while supporting a comprehensive design ecosystem. The Company's products serve diverse electronic sectors including artificial intelligence, high-performance computing, wired and wireless communications, automotive and industrial equipment, personal computing, information applications, consumer electronics, smart internet of things, and wearable devices.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
TSMC Controls 99% of AI Processor Foundry Market
- Market Dominance: TSMC controls 99% of the foundry market for AI server compute and custom AI processors, positioning itself as a critical technology enabler for emerging AI giants like Anthropic, thereby solidifying its leadership in the semiconductor industry.
- Revenue Growth Momentum: In 2025, TSMC achieved a 36% revenue increase to $122.4 billion, with January 2026 revenue growing nearly 37% year-over-year, indicating potential to exceed its 30% growth target and boosting investor confidence.
- AI Chip Market Outlook: RBC Capital Markets projects AI chip sales to rise from $220 billion last year to over $550 billion by 2028, placing TSMC in a prime position to capitalize on this lucrative market as the preferred foundry for AI chip designs.
- Investment Appeal: TSMC's forward earnings multiple of 26 aligns closely with the Nasdaq-100 index, and its earnings are expected to grow faster than the broader market, suggesting that investors are unlikely to go wrong with this semiconductor giant.
See More
Three Tech Giants Set to Benefit from AI Surge
- Nvidia's Market Leadership: As a leading designer of AI processors, Nvidia is poised to benefit from the increasing spending on AI data center infrastructure, particularly as Alphabet and Meta ramp up capital expenditures to $185 billion and $135 billion respectively, driving demand for Nvidia's processors.
- Alphabet's Gemini Success: Alphabet's Gemini chatbot now boasts 750 million monthly active users, a 67% increase from nine months ago, and has secured a partnership with Apple to make Gemini the underlying AI model for an upcoming version of Siri, which is expected to generate billions in revenue for Alphabet.
- Taiwan Semiconductor's Market Share: Taiwan Semiconductor holds a 70% share of the global semiconductor manufacturing market, with revenue projected to increase by 30% to $122.4 billion by 2025, and diluted earnings expected to rise by 47% to $10.65 per ADR, showcasing its strong performance amid surging AI processor demand.
- Long-Term Competitive Advantage: Research from Morningstar indicates that TSMC's organic growth driven by major tech trends could last for decades, with management confidently forecasting a 30% increase in sales this year, further solidifying its market position.
See More
Three Tech Stocks Worth Holding Long-Term
- Nvidia's Market Position: As the leading designer of AI processors, Nvidia's stock remains attractive despite bubble concerns, with a current P/E ratio of 47, slightly above the tech sector average of 43, indicating strong demand amid increasing AI infrastructure spending.
- Alphabet's AI Success: Alphabet's Gemini chatbot has reached 750 million monthly active users, a 67% increase in nine months, and its collaboration with Apple to integrate Gemini into Siri is expected to generate billions in revenue, further boosting its cloud computing growth.
- Taiwan Semiconductor's Competitive Edge: Holding a 70% market share in the global semiconductor market, TSMC's advanced chip manufacturing and high yield rates position it well, with projected revenue growth of 30% to $122.4 billion by 2025, reflecting strong performance amid surging AI processor demand.
- Optimistic Industry Outlook: All three companies excel in the AI sector, with reasonable P/E ratios of 47, 30, and 34 for Nvidia, Alphabet, and TSMC respectively, suggesting that investors can expect substantial returns over the coming years.
See More
TSMC Leads Growth in AI Chip Market
- Market Share Advantage: TSMC holds a 99% share in AI server compute and custom AI processor manufacturing, making it a crucial enabler for emerging AI giants like Anthropic, thereby solidifying its leadership in the semiconductor industry.
- Significant Revenue Growth: In 2025, TSMC's revenue surged by 36% to $122.4 billion, with January 2026 revenue growing nearly 37% year-over-year, indicating potential to exceed its 30% growth target and boosting investor confidence.
- AI Chip Market Outlook: RBC Capital Markets projects AI chip sales to rise from $220 billion last year to over $550 billion by 2028, positioning TSMC as the foundry of choice for AI chip designs, ready to capitalize on this lucrative market opportunity.
- Enhanced Investment Value: TSMC's forward earnings multiple of 26 aligns with the Nasdaq-100 index, and its earnings growth is expected to outpace the broader market, suggesting that investors will not be disappointed with this semiconductor giant.
See More
Cryptocurrency Market Slump and Tech Stock Opportunities
- Cryptocurrency Market Decline: The overall cryptocurrency market has fallen over 45% since reaching a high of $4.28 trillion on October 6, 2025, primarily driven by Bitcoin's price drop and institutional ETF withdrawals, highlighting the market's heavy reliance on sentiment and liquidity.
- Alphabet's Strong Earnings: Alphabet reported $113.8 billion in revenue for Q4, an 18% year-over-year increase, with net income of $34.45 billion, up nearly 30%, although the market reacted cautiously to its $185 billion AI infrastructure spending, the rapid growth of its cloud computing division indicates strong business potential.
- TSMC's Market Share Growth: Taiwan Semiconductor Manufacturing increased its market share from 66% to 72% in Q3, with Q4 revenue reaching $33.73 billion, a 25.5% year-over-year increase, and guidance for even better revenue in Q1, showcasing its leadership and robust growth prospects in the semiconductor industry.
- Oracle's Cloud Computing Growth: Oracle generated $7.97 billion in revenue in Q2 of fiscal 2026, a 34% increase year-over-year, with cloud computing becoming its largest revenue driver; despite over $100 billion in debt, its growth potential remains significant compared to the risks associated with cryptocurrencies.
See More
Sandisk and TSMC: Bright Prospects Amid Market Recovery
- Attractive Valuation for Sandisk: Despite Sandisk's (SNDK) stock price doubling this year, its forward P/E ratio remains at 15 times, indicating strong attractiveness for fiscal 2026, with expectations of robust revenue growth driven by the recovery in the flash memory market over the coming years.
- Surging NAND Prices: The surge in demand for high-performance solid-state drives in AI data centers has led to a significant increase in NAND prices, boosting Sandisk's sales and gross margins, which is expected to enhance its competitive position and solidify its market share.
- TSMC's Market Dominance: Taiwan Semiconductor Manufacturing (TSM), as the world's largest foundry, has a forward P/E of about 26 times, and despite trading near all-time highs, its central role in AI infrastructure makes it a valuable investment, with AI chip revenue projected to grow at over 50% annually through 2029.
- Strong Pricing Power: TSMC's near-monopoly in advanced chip manufacturing, characterized by high pricing power and low defect rates, positions it as a crucial partner for chip designers, ensuring continued benefits from the surging demand for AI chips in the future.
See More
TSMC Controls 99% of AI Processor Foundry Market
- Market Dominance: TSMC controls 99% of the foundry market for AI server compute and custom AI processors, positioning itself as a critical technology enabler for emerging AI giants like Anthropic, thereby solidifying its leadership in the semiconductor industry.
- Revenue Growth Momentum: In 2025, TSMC achieved a 36% revenue increase to $122.4 billion, with January 2026 revenue growing nearly 37% year-over-year, indicating potential to exceed its 30% growth target and boosting investor confidence.
- AI Chip Market Outlook: RBC Capital Markets projects AI chip sales to rise from $220 billion last year to over $550 billion by 2028, placing TSMC in a prime position to capitalize on this lucrative market as the preferred foundry for AI chip designs.
- Investment Appeal: TSMC's forward earnings multiple of 26 aligns closely with the Nasdaq-100 index, and its earnings are expected to grow faster than the broader market, suggesting that investors are unlikely to go wrong with this semiconductor giant.
See More
Three Tech Giants Set to Benefit from AI Surge
- Nvidia's Market Leadership: As a leading designer of AI processors, Nvidia is poised to benefit from the increasing spending on AI data center infrastructure, particularly as Alphabet and Meta ramp up capital expenditures to $185 billion and $135 billion respectively, driving demand for Nvidia's processors.
- Alphabet's Gemini Success: Alphabet's Gemini chatbot now boasts 750 million monthly active users, a 67% increase from nine months ago, and has secured a partnership with Apple to make Gemini the underlying AI model for an upcoming version of Siri, which is expected to generate billions in revenue for Alphabet.
- Taiwan Semiconductor's Market Share: Taiwan Semiconductor holds a 70% share of the global semiconductor manufacturing market, with revenue projected to increase by 30% to $122.4 billion by 2025, and diluted earnings expected to rise by 47% to $10.65 per ADR, showcasing its strong performance amid surging AI processor demand.
- Long-Term Competitive Advantage: Research from Morningstar indicates that TSMC's organic growth driven by major tech trends could last for decades, with management confidently forecasting a 30% increase in sales this year, further solidifying its market position.
See More
Three Tech Stocks Worth Holding Long-Term
- Nvidia's Market Position: As the leading designer of AI processors, Nvidia's stock remains attractive despite bubble concerns, with a current P/E ratio of 47, slightly above the tech sector average of 43, indicating strong demand amid increasing AI infrastructure spending.
- Alphabet's AI Success: Alphabet's Gemini chatbot has reached 750 million monthly active users, a 67% increase in nine months, and its collaboration with Apple to integrate Gemini into Siri is expected to generate billions in revenue, further boosting its cloud computing growth.
- Taiwan Semiconductor's Competitive Edge: Holding a 70% market share in the global semiconductor market, TSMC's advanced chip manufacturing and high yield rates position it well, with projected revenue growth of 30% to $122.4 billion by 2025, reflecting strong performance amid surging AI processor demand.
- Optimistic Industry Outlook: All three companies excel in the AI sector, with reasonable P/E ratios of 47, 30, and 34 for Nvidia, Alphabet, and TSMC respectively, suggesting that investors can expect substantial returns over the coming years.
See More
TSMC Leads Growth in AI Chip Market
- Market Share Advantage: TSMC holds a 99% share in AI server compute and custom AI processor manufacturing, making it a crucial enabler for emerging AI giants like Anthropic, thereby solidifying its leadership in the semiconductor industry.
- Significant Revenue Growth: In 2025, TSMC's revenue surged by 36% to $122.4 billion, with January 2026 revenue growing nearly 37% year-over-year, indicating potential to exceed its 30% growth target and boosting investor confidence.
- AI Chip Market Outlook: RBC Capital Markets projects AI chip sales to rise from $220 billion last year to over $550 billion by 2028, positioning TSMC as the foundry of choice for AI chip designs, ready to capitalize on this lucrative market opportunity.
- Enhanced Investment Value: TSMC's forward earnings multiple of 26 aligns with the Nasdaq-100 index, and its earnings growth is expected to outpace the broader market, suggesting that investors will not be disappointed with this semiconductor giant.
See More
Cryptocurrency Market Slump and Tech Stock Opportunities
- Cryptocurrency Market Decline: The overall cryptocurrency market has fallen over 45% since reaching a high of $4.28 trillion on October 6, 2025, primarily driven by Bitcoin's price drop and institutional ETF withdrawals, highlighting the market's heavy reliance on sentiment and liquidity.
- Alphabet's Strong Earnings: Alphabet reported $113.8 billion in revenue for Q4, an 18% year-over-year increase, with net income of $34.45 billion, up nearly 30%, although the market reacted cautiously to its $185 billion AI infrastructure spending, the rapid growth of its cloud computing division indicates strong business potential.
- TSMC's Market Share Growth: Taiwan Semiconductor Manufacturing increased its market share from 66% to 72% in Q3, with Q4 revenue reaching $33.73 billion, a 25.5% year-over-year increase, and guidance for even better revenue in Q1, showcasing its leadership and robust growth prospects in the semiconductor industry.
- Oracle's Cloud Computing Growth: Oracle generated $7.97 billion in revenue in Q2 of fiscal 2026, a 34% increase year-over-year, with cloud computing becoming its largest revenue driver; despite over $100 billion in debt, its growth potential remains significant compared to the risks associated with cryptocurrencies.
See More
Sandisk and TSMC: Bright Prospects Amid Market Recovery
- Attractive Valuation for Sandisk: Despite Sandisk's (SNDK) stock price doubling this year, its forward P/E ratio remains at 15 times, indicating strong attractiveness for fiscal 2026, with expectations of robust revenue growth driven by the recovery in the flash memory market over the coming years.
- Surging NAND Prices: The surge in demand for high-performance solid-state drives in AI data centers has led to a significant increase in NAND prices, boosting Sandisk's sales and gross margins, which is expected to enhance its competitive position and solidify its market share.
- TSMC's Market Dominance: Taiwan Semiconductor Manufacturing (TSM), as the world's largest foundry, has a forward P/E of about 26 times, and despite trading near all-time highs, its central role in AI infrastructure makes it a valuable investment, with AI chip revenue projected to grow at over 50% annually through 2029.
- Strong Pricing Power: TSMC's near-monopoly in advanced chip manufacturing, characterized by high pricing power and low defect rates, positions it as a crucial partner for chip designers, ensuring continued benefits from the surging demand for AI chips in the future.
See More
