Taiwan Semiconductor's AI Dominance Fuels Market Outperformance and Expansion

Taiwan Semiconductor Outperforming The Market Shows Moat, But It Comes With Risk - Taiwan Semiconductor (NYSE:TSM)

Taiwan Semiconductor Manufacturing Co TSM stock surged 14% year-to-date, beating the market considerably despite Washington's tariff policies and semiconductor sanctions cast a shadow over a sustained AI frenzy. During the same period, the PHLX Semiconductor Index, of which Taiwan Semiconductor is also a constituent, generated 11% returns. S&P 500 and NASDAQ Composite Indexes generated approximately 5% returns during the period. Also Read: Taiwan Semiconductor's Affiliate Fast-Tracks Singapore Plant Spurred By Geopolitics The key supplier of Nvidia Corp NVDA and Apple Inc AAPL has generated 32% returns in the last three months, compared to 29% for PHLX Semiconductor, 10% for the S&P 500, and 16% for the Nasdaq Composite. Risks The Trump administration has also explored plans to end waivers for chipmakers to prevent the export of American technology to China. Apart from the geopolitical risk, TSMC is also susceptible to currency risk due to high U.S. dollar exposure. The company's overseas unit, Taiwan Semiconductor Global, faces a currency risk - the Taiwanese dollar is strengthening against the now volatile and weakening U.S. dollar. TSMC Global Ltd. is preparing to raise $10 billion by issuing new shares to manage currency volatility and maintain capital flexibility. This marks the third such equity move since 2024, and it is the largest to date. The timing coincides with the recent appreciation of the Taiwan dollar. TSMC's CEO C. C. Wei informed shareholders this month that the stronger currency has reduced the firm's operating margin by several percentage points. Earnings and Market Share In April, Taiwan Semiconductor reported first-quarter net sales of $25.53 billion (839.25 billion New Taiwanese Dollars), up 41.6% year-over-year, topping the analyst consensus estimate of $23.92 billion. However, the net sales declined 3.4% Q/Q. In U.S. dollar terms, revenue growth was 35.3% Y/Y and down by 5.1% Q/Q. Taiwan Semiconductor's AI technology moat helped it expand its quarterly gross margins by 572 bps to 58.8%. In March, Taiwan Semiconductor chief C.C. Wei announced an additional $100 billion investment in U.S. chipmaking (on top of the $65 billion announced in April 2024). The chipmaker explored commercializing its advanced 2-nanometer process using gate-all-around (GAA) technology in the second half of 2025. According to analyst Ming-Chi Kuo, Apple is expected to equip its upcoming iPhone 18 lineup with Taiwan Semiconductor's advanced 2nm A20 chip. Intel Corp INTC and Advanced Micro Devices AMD have also selected Taiwan Semiconductor to manufacture chips using the same cutting-edge 2nm process. Taiwan Semiconductor grew its market share to 67.6% in the first quarter of 2025 from 67.1% in the previous quarter, Focus Taiwan cited Trendforce. Samsung Electronics SSNLF held a 7.7% global market share, down from 8.1% Q/Q. The top 10 contract chipmakers reported $36.4 billion in sales in the first quarter, down ~5.4% Q/Q. They account for ~97% of the global total, up from 96% in the fourth quarter. Analyst Opinion Taiwan Semiconductor has a consensus price forecast of $210.8 based on the ratings of 6 analysts. The high is $270, issued by Needham on July 1, 2025. With an average price forecast of $255 between Needham, Susquehanna, and Barclays, there's an implied 12.90% upside for Taiwan Semiconductor from these most recent analyst ratings. Last week, Cathie Wood-led Ark Invest acquired 65,102 shares of Taiwan Semiconductor. Price Action: TSM stock traded higher by 0.33% at $225.43 premarket at the last check on Wednesday. Read Next: Broadcom Outpaced Major Indexes In 2025 - What Went Down Photo by wakamatsu via Shutterstock TSMTaiwan Semiconductor Manufacturing Co Ltd$224.60-0.04%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum79.26Growth94.80QualityNot AvailableValue49.74Price TrendShortMediumLongOverviewAAPLApple Inc$209.510.81%AMDAdvanced Micro Devices Inc$134.74-1.01%INTCIntel Corp$22.60-1.09%NVDANVIDIA Corp$151.86-0.94%SSNLFSamsung Electronics Co Ltd$42.48-%Market News and Data brought to you by Benzinga APIs

Why Taiwan Semiconductor Manufacturing Stock Jumped Today | The Motley Fool

The semiconductor giant's stock got a boost after an analyst raised his price target on the stock. Charles Shi, an analyst at Needham, reiterated his buy rating on Tuesday on TSMC's stock, raising his price target from $225 to $270. The analyst believes the company's AI revenue will continue to explode, rising from $26 billion this year to $46 billion in 2027. Shi expects TSMC's dominance to continue, saying, "We expect TSMC's foundry business to strengthen as we do not foresee a competitive challenge for the next several years." That sentiment looks right on the money after it was reported today that Intel is considering shutting down a part of its fabrication efforts in favor of its next-generation fabrication capacity. If the company shuts down its 1.8 nanometer fabrication, the current industry standard, it would leave TSMC with essentially no rival until Intel's 1.4 nanometer fabrication can get off the ground. The company is clearly the global leader in semiconducting fabrication, especially that of hyper-advanced artificial intelligence-powering chips. That is a business not easily disrupted; TSMC has a substantial moat protecting it. I think the stock is a great pick.

Prediction: This Magnificent Artificial Intelligence (AI) Stock Will Skyrocket to New Highs in July | The Motley Fool

Taiwan Semiconductor Manufacturing (TSM 0.75%) stock has jumped sharply in the past three months, clocking impressive gains of 37% during this period, and there is a good chance that the foundry giant will jump to new highs in July. TSMC stock is currently trading at the higher end of its 52-week range following its recent surge. The company is expected to release its second-quarter results on July 17, and there is a good chance that it could hit new 52-week highs after it releases its results. Let's look at the reasons why that may happen. TSMC is the world's largest semiconductor foundry, and the company is becoming more dominant in this market with each passing quarter. According to market research firm TrendForce, TSMC's share of the global foundry market increased to almost 68% in the first quarter of 2025. That's an improvement of six percentage points when compared to the year-ago period. There is a good chance that TSMC's foundry market share gains continued in the year's Q2, as evident by the terrific increase in the company's monthly revenue figures. TSMC's April revenue shot up an impressive 48% year over year, while its May revenue was up by almost 40%. Consensus estimates are projecting TSMC's Q1 revenue to increase by 37% from the year-ago period. The company's revenue growth in the first couple of months of the quarter suggests that it could end up exceeding analysts' expectations when it releases its results. That won't be surprising as TSMC management recently pointed out that the demand for the artificial intelligence (AI) chips that it manufactures for multiple chipmakers such as Nvidia, AMD, Broadcom, Marvell Technology, and others has been outpacing supply. As a result, TSMC has been aggressively building more fabrication plants so that it can capitalize on the booming demand for AI chips. The company is on track to construct nine new production facilities in 2025. That's not surprising as it is witnessing a surge in orders for advanced chips from the likes of Nvidia and Apple, which are queueing up to tap TSMC's facilities to fabricate AI chips. So, this combination of an increase in capacity and stronger demand for its chips could be enough for TSMC to exceed Wall Street's Q2 expectations when it releases its results this month. What's more, TSMC is reportedly increasing the prices of its current and next-generation process nodes. So there is a good chance that the company's margin profile could continue to improve going forward and lead to stronger growth in its earnings. A big reason why customers can be expected to pay a premium for the chips fabricated by TSMC is because of the technology advantage it enjoys over rivals, which enables the company to produce chips that are not only more powerful but also power efficient. That's the reason why TSMC is forecasting an operating margin of 48% for Q2, which would be a big jump over the year-ago period's reading of 42.5%. Not surprisingly, analysts are expecting TSMC's earnings to jump by 54% in the current quarter to $2.28 per share. However, stronger volume shipments thanks to the factors discussed above, as well as the price hikes, could pave the way for a stronger jump in TSMC's quarterly earnings. Moreover, the persistently strong demand for AI chips, which is evident from the recent quarterly results posted by some of TSMC's customers that point toward an acceleration in their AI-related growth in the current quarter, is an indication that its outlook could also be solid. All this could pave the way for more upside in TSMC stock, which is why it would be a good idea to buy it before its upcoming quarterly report when we take into account its incredibly attractive valuation. When we consider the solid report that TSMC is on track to deliver in a few weeks, and importantly, its ability to sustain elevated growth levels over the long run, buying the stock right now is a no-brainer. After all, TSMC is trading at just 27 times sales, which is a discount to the tech-laden Nasdaq-100 index's price-to-earnings ratio of 32. The forward earnings multiple of 24 is even more attractive, especially considering that its bottom-line growth rate is expected to accelerate in the future as well. So, investors can consider buying this AI stock going into its quarterly report as stronger-than-expected results and outlook are likely to help TSMC jump to new highs.

If I Could Load Up on Any Artificial Intelligence (AI) Stock, It Would Be This One (Hint: It's Not Nvidia) | The Motley Fool

Artificial intelligence (AI) has been around for a while, but it gained mainstream popularity in early 2023 due to the rise of generative AI tools like OpenAI's ChatGPT and Alphabet's Google Gemini. Plenty of tech stocks have seen their valuations skyrocket because of the AI boom, but the biggest beneficiary has undoubtedly been Nvidia (NVDA 1.28%). Over the past three years, its stock has increased by nearly 920%, while the S&P 500 has risen around 64% over the same period. Nvidia has gotten a lot of attention, and rightfully so. Its graphics processing units (GPUs) and AI software are very important to the AI ecosystem. However, there's another company that Nvidia relies on heavily that's just as important, and it's a stock I'm loading up on: Taiwan Semiconductor Manufacturing Company (TSM 0.75%) (TSMC). At first glance, calling a manufacturing company like TSMC an AI stock might seem unusual, but it's a pivotal player in how the technology all comes together. Let's take a look at how its business works. TSMC is the world's largest semiconductor (chip) manufacturer and the pioneer of the foundry business model. You can't buy TSMC chips in a store or online like a smartphone or laptop. Instead, companies go to TSMC with their chip designs, and it manufactures them, bringing those designs to life. For example, it makes chips for Apple's iPhones, Tesla's self-driving technology, AMD's processors, Nvidia's GPUs, and plenty of other applications. TSMC's relationship with Nvidia and other AI-chip designers is why I'm willing to consider it an "AI stock," even as a chip manufacturing company. In fact, TSMC manufactures the vast majority of all high-performance AI chips, so there's a strong case to be made that without the company and its capabilities, the AI landscape would look significantly different -- for the worse. The increased demand for AI chips is showing up in TSMC's financials. In the first quarter, its revenue increased 35% year over year to $25.5 billion. It expects its Q2 revenue to come in between $28.4 billion and $29.2 billion, representing year-over-year growth of 36% to 40%. That's impressive for a company of TSMC's size. Just three years ago, in Q1 2022, smartphone chips accounted for 40% of TSMC's revenue, while high-performance chips (HPCs), which include AI chips, accounted for 41%. Fast-forward to Q1 this year, and HPCs accounted for 59% of revenue, while smartphones accounted for only 28%. This shift in the composition of the company's top line isn't showing any signs of slowing down. One of the risks facing TSMC's business is the geopolitical tension between Taiwan and China. However, management is working to address this concern by expanding its operations globally. TSMC currently has (or will have soon) manufacturing plants in the U.S., Germany, and Japan. This can help reduce some of its geographical risk. There's a reason so many of the world's top companies rely heavily on TSMC -- it's the best at what it does. Having the most technologically advanced foundries and a large customer base that often signs long-term contracts puts TSMC in a position to have consistent and reliable growth for quite some time. Trading at 28.9 times trailing earnings as of this writing, TSMC stock isn't "cheap" by most standards, but it's less expensive than other well-known AI stocks like Nvidia and Broadcom. And in this case, it's worth paying the slight premium for this undisputed industry leader, especially if you're looking for a long-term buy-and-hold position.

Cathie Wood Just Went Bargain Hunting: 2 Artificial Intelligence (AI) Chip Stocks She Just Scooped Up (Hint: Nvidia Isn't One of Them) | The Motley Fool

As CEO and chief investment officer of Ark Invest, Cathie Wood might be best known for her high conviction in speculative opportunities across industries such as genomics and cryptocurrency. When it comes artificial intelligence (AI), many of Ark's biggest positions are in volatile stocks such as Tesla and Palantir Technologies. Over the last couple of months, however, Wood has quietly been rounding out her exchange-traded funds (ETFs) with semiconductor stocks. Let's explore two AI chip stocks that have recently become rising stars in the Ark portfolio. Is now the time to follow Wood's moves? Read on to find out. While Advanced Micro Devices (AMD -0.45%) has been part of Ark's portfolio for quite some time, the investment firm began aggressively adding to its position throughout late April and most of May. According to public trading data, Ark added approximately 800,000 shares of AMD between June 17 and 30. The position is spread across the Ark Autonomous Technology & Robotics ETF, Ark Next Generation Internet ETF, Ark Fintech Innovation ETF, and Ark Innovation ETF. As of this writing, AMD has now become the 11th biggest position for Ark Invest overall. In fairness, AMD's rise at Ark has been influenced by some pronounced share price gains in recent weeks too. Since Ark began adding to its AMD position in late April, shares have gained roughly 61%. In my eyes, AMD's recent gains can be tied to the company's accelerating data center business as well as bullish anticipation for its new AI accelerators during the second half of this year. Nevertheless, even with such a massive move in the share price, AMD trades for roughly 36 times forward earnings. Although this isn't exactly cheap, shares of AMD are well within their usual valuation range. My hunch is that AMD is still being discounted by some investors, primarily due to the enormous competitive threat the company faces from Nvidia. Considering how much momentum is fueling AMD stock right now, I think I'd sit on the sidelines for the time being. To me, the company's long-term prospects are somewhat ambiguous so long as Nvidia remains king of the chip industry. While there is likely still good money to be made in AMD stock, there are more reasonable price points to build a position. Ark complemented its AMD purchases with some exposure to Taiwan Semiconductor Manufacturing (TSM 0.75%) back in May. The firm doubled down on this decision by adding over 190,000 shares of TSMC throughout June. I see TSMC as the most interesting opportunity within the broader chip landscape. Unlike Nvidia, AMD, Broadcom, or the cloud hyperscalers, TSMC doesn't specialize in designing its own chipsets. Rather, the company offers industry-leading fabrication services that bring semiconductor designs to life. This puts TSMC in a unique position as the company stands to benefit from rising spend in AI infrastructure over the coming years, regardless of which specific chipsets are witnessing the most demand. Looked at another way, investors in TSMC need not overanalyze which chip company will sell the most graphics processing units (GPUs). Rather, an investment in TSMC could be viewed similarly to a call option on ongoing investment in data center infrastructure and AI chips for the long term. While TSMC has witnessed some notable valuation expansion throughout the AI revolution, the company's forward price-to-earnings (P/E) multiple of 25 is still reasonable. Unlike AMD, I do not think rising competition is what concerns investors over a position in TSMC, though. Rather, it's geopolitical tensions with China that give way to uncertainty over TSMC's growth prospects. Given the company's ongoing investments in geographic expansion, though, I think the concerns over China are exaggerated and likely baked into the stock at this point. As I wrote a few weeks ago, TSMC might be the best bargain in the AI market right now. Compelling secular tailwinds, combined with an industry-leading position in the fabrication market, strong institutional backing, and a reasonable valuation, make TSMC a no-brainer for long-term investors.

Q2 Earnings Test TSMC Stock's Moat (NYSE:TSM)

TSM's 3nm and 5nm nodes accounted for 58% of Q1 wafer revenue, driving the company's strategic AI leadership narrative. As Taiwan Semiconductor Manufacturing (TSMC) (NYSE:TSM) heads into its Q2 earnings on July 17, investors face a critical moment that could redefine its premium valuation for years to come. Beneath the headline 54% EPS growth lies a structural inflection: can the Pythia Research focuses on multi-bagger stocks, primarily in the technology sector. Our approach combines financial analysis, behavioral finance, psychology, social sciences, and alternative metrics to assess companies with high conviction and asymmetric risk-reward potential. By leveraging both traditional and unconventional insights, we aim to uncover breakout opportunities before they gain mainstream attention. Our multidisciplinary strategy helps us navigate market sentiment, identify emerging trends, and invest in transformative businesses poised for exponential growth. We don't just follow the market -- we anticipate where disruption will create the next big winners.Markets don't move purely on fundamentals; they move on perception, emotion, and bias. We lean into that reality. Investor behavior, anchoring to past valuations, herd mentality during rallies, panic selling from recency bias, creates persistent inefficiencies. These moments of mispricing often mark the start of a breakout, not the end of one.Rather than avoid psychological noise, we analyze it. When the crowd sees volatility, we assess whether it's driven by emotion or fundamentals. Status quo bias can keep investors blind to companies redefining their category. Fear of uncertainty can delay recognition of businesses with clear but unconventional growth paths. We look for these disconnects.Our process blends deep research with signals others miss: sudden shifts in narrative, early social traction, founder-driven vision, or underappreciated momentum in developer or user adoption. These are often the precursors to exponential moves, if you catch them early.We focus on conviction plays, not safe bets. Each opportunity is evaluated for Risk/Reward profile: limited downside, explosive upside. We believe that the best returns come from understanding where belief is lagging reality. Analyst's Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.