TSMC Joins $1 Trillion Club Amid AI Chip Boom

AI chip maker TSMC joins the $1 trillion market-cap club

Taiwan Semiconductor Manufacturing Co. (TSMC) reached a $1 trillion market capitalization for the first time last week, amid soaring demand for artificial intelligence chips. On Friday, TSMC saw its shares in Taiwan hit an all-time high of NT $1,155 ($39.3 USD), rounding off a rally of almost 50% since April. TSMC is the first Asian company to cross the $1 trillion threshold since PetroChina in 2007. The milestone came after the company posted strong earnings, which buoyed shares. In U.S. dollars, second-quarter revenue was $30.07 billion, up 44.4% year-over-year and up 17.8% from the previous quarter. The company raised its full-year revenue forecast to around 30% growth, suggesting its position to capitalize on the race for AI manufacturing capacity. "Our business in the second quarter was supported by continued robust AI and HPC-related demand," said Wendell Huang, CFO of TSMC. "Moving into third quarter 2025, we expect our business to be supported by strong demand for our leading-edge process technologies." "TSMC's fabs are arguably the most important real estate in the world," Chris Miller wrote in his 2022 book Chip War. Soaring demand for these semiconductors have led shares in TSMC to triple since 2023. On the benchmark MSCI Emerging Markets index, which captures large and mid-cap representation across 24 countries, TSMC accounts for 10.2% of its weight and about 40% of the its returns this year. While Taiwan has thus far been spared from President Donald Trump's reciprocal tariffs on U.S. imports, the trade war could still have consequences for the chipmaker should the technology that it powers become more expensive for consumers. "There are uncertainties and risks from the potential impact of tariff policies, especially on consumer-related and the price-sensitive market segment," TSMC CEO C.C. Wei said during an earnings call. Yet, Wei downplayed these risks during the company's annual shareholders meeting last month: "If demand drops, TSMC's business could be affected. But I can assure you that AI demand has always been very strong and it's consistently outpacing supply." What's more, the plunging U.S. dollar also poses a threat to TSMC's margins as "nearly all" of its revenue is in USD, but reported in NT. The U.S. dollar is down 10% this year against a basket of currencies, with the USD/NT exchange rate down by the same margin. "Fluctuations in the exchange rate between the dollar and NT will have a sizable impact on our reported revenue and gross profit margin," said Huang during Friday's call. Every 1% appreciation of NT against USD will reduce reported revenue by 1%, and gross margin by about 40 basis points, he continued. Second-quarter revenue fell by about 4.4% and gross margin by about 180 basis points. The company forecasts this currency trajectory will continue in the third quarter, cutting revenue by 6.6% and gross margin by about 260 basis points.

TSMC Nearly Reaches Tesla's Market Cap | AIM

Taiwan Semiconductor Manufacturing Company (TSMC) has reached a market capitalisation of TWD 29.30 trillion (~$1.03 trillion), matching that of electric carmaker Tesla in valuation. As of July 22, TSMC's stock stood at TWD 1,130, with a high of TWD 1,160 and 0.89% growth over the past five trading days. TSMC became only the third semiconductor company, after NVIDIA and Broadcom, to hit the $1 trillion mark. This isn't the first time TSMC has brushed against the trillion-dollar milestone. In July last year, the chipmaker briefly hit this mark before slipping amid market fluctuations. The company remains a critical supplier of advanced chips to global firms like Apple and NVIDIA. With this rise, TSMC joins the ranks of trillion-dollar firms, including Apple (~$3.17 trillion), Microsoft (~$3.79 trillion) and Alphabet (~$2.31 trillion). NVIDIA currently leads the tech sector with a valuation of $4.18 trillion, as of today. TSMC's next earnings call and its developments in 2nm and 1.4nm technologies are expected to influence the stock's trajectory in Q3. For its recent Q2 FY26 results, TSMC announced consolidated revenue of $30.07 billion, representing a 44.4% year-over-year increase and a 17.8% quarter-over-quarter increase. In the second quarter, the company's shipments accounted for 24% of total wafer revenue for 3 nm, 36% for 5nm, and 14% for 7nm. "Our business in the second quarter was supported by continued robust AI and HPC-related demand," Wendell Huang, senior VP and chief financial officer of TSMC, said. "Moving into third quarter 2025, we expect our business to be supported by strong demand for our leading-edge process technologies." In October last year, for Q2 FY25, the chip maker had outpaced its rivals, Samsung and Qualcomm, in the semiconductor foundry space with its advanced technology, manufacturing capabilities, research and strategic partnerships. Earlier in June, TSMC accelerated the construction of its second chip plant in Arizona, following an additional $100 billion investment in the United States announced in March. This came amid growing geopolitical concerns and efforts to diversify its manufacturing base outside Taiwan. The company also made headlines after rejecting an invitation to set up factories in India, citing concerns around infrastructure and supply chain readiness. Meanwhile, Meta was reported to be in talks with TSMC to manufacture its first in-house AI chip, expanding the chipmaker's growing list of global tech clients.

TSMC just hit a $1 trillion market cap. These 5 companies could be next

Last week, Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), also known as TSMC, crossed an important psychological threshold for investors. The Taiwanese company surpassed a $1 trillion market capitalization, making it the first Asian company to do so since China's PetroChina oil and gas giant briefly achieved this milestone in 2007, notes GuruFocus. TSMC manufactures the most advanced computer chips in the world, which are essential for running the most complex AI tasks. The company makes chips for a variety of tech giants, including Nvidia and Apple. As of the time of this writing, TSMC has a market capitalization of approximately $1.2 trillion. The chipmaking giant has achieved this 12-figure valuation on the strength of its chip business in recent months, which has seen a surge in demand thanks to the artificial intelligence boom sweeping the world. But the question many people may be wondering now is who's next in line to join the $1 trillion club? Here's what the numbers say.

Taiwan Semiconductor's Trillion-Dollar Power Play - Taiwan Semiconductor (NYSE:TSM)

Taiwan Semiconductor Manufacturing Co. TSM plans to start construction on four new fabs later this year, targeting mass production of 2-nanometer chips by late 2028, according to Central Taiwan Science Park Bureau Director-General Hsu Maw-shin. The new facilities, designated Fab 25, will house four 1.4-nanometer wafer production lines. The contract chipmaker aims to complete risk assessments by 2027 and ramp up to a monthly output of 50,000 wafers, the Taipei Times reported on Sunday. Taiwan Semiconductor has already leased the land for the new fabs, with the Central Taiwan Science Park transferring the site last month. The park's second-phase expansion will begin with soil and water conservation infrastructure, including detention ponds. Also Read: Taiwan Semiconductor CFO Warns Of Margin Pressure, Prudent $42 Billion CapEx Plan Hsu projected that the park's annual turnover will exceed 1.2 trillion New Taiwan dollars ($40.81 billion), setting a new record. During Taiwan Semiconductor's second-quarter earnings call, Chairman C.C. Wei disclosed that the company will allocate about 30% of its 2-nanometer and more advanced chip capacity to Arizona after completing its $165 billion U.S. investment. That investment includes six wafer fabs, two advanced packaging facilities, and a major R&D center. Wei also said Taiwan Semiconductor plans to build 11 wafer fabs and four advanced packaging facilities globally over the next few years. The company is preparing additional 2-nanometer fabs in Hsinchu and Kaohsiung to meet growing customer demand. Trending Investment OpportunitiesAdvertisementArrivedBuy shares of homes and vacation rentals for as little as $100. Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedPoint.comTap into your home's equity to consolidate debt or fund a renovation.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get Started Taiwan Semiconductor closed with a market value above $1 trillion in Taipei for the first time last week, driven by a sharp rise in sales forecasts fueled by soaring demand for artificial intelligence chips. The chipmaker's shares surged to a record high on Friday, marking a nearly 50% gain since April and making it the first Asian stock to top the $1 trillion mark since PetroChina briefly did so in 2007, Bloomberg reported on Monday. The chipmaker is a key Nvidia NVDA and Apple AAPL supplier. The company raised its full-year revenue growth outlook to around 30%, signaling strong positioning amid intensifying competition for AI chip production. Goldman Sachs analysts, including Bruce Lu, observed that demand for Taiwan Semiconductor's advanced nodes continues to grow steadily. They anticipate the company will introduce more significant price increases in 2026 as AI-driven orders remain strong. Price Action: TSM stock is trading higher by 0.37% to $241.29 premarket at last check Monday. Read Next: Meta Raids Apple's AI Lab With Big Paychecks -- Zuckerberg Bets To Win The AI Race Photo by Jack Hong via Shutterstock TSMTaiwan Semiconductor Manufacturing Co Ltd$241.870.61%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum84.51Growth28.25QualityN/AValue49.24Price TrendShortMediumLongOverviewAAPLApple Inc$211.980.38%NVDANVIDIA Corp$172.940.31%Market News and Data brought to you by Benzinga APIs

Everyone's Watching Nvidia -- but This AI Supplier Is the Real Power Player | The Motley Fool

Nvidia gets the spotlight, but this behind-the-scenes AI chipmaker is the real force powering the industry. Nvidia (NVDA -0.12%) is considered a pioneer in the artificial intelligence (AI) hardware market, and rightly so, as the chip designer's graphics processing units (GPUs) have allowed cloud computing companies and others to train AI models and run inference applications. The parallel computing power of Nvidia's GPUs makes them ideal for performing a large number of calculations simultaneously, which is precisely what's required for training AI models. Also, these chips are now gaining traction in AI inference as well, thanks to their ability to quickly make predictions and decisions using the trained model. Not surprisingly, Nvidia has established a solid foothold in the AI chip market. It towers above its competitors with an estimated market share of 80% in AI data center accelerators. However, Nvidia's dominance wouldn't have been possible without its foundry partner Taiwan Semiconductor Manufacturing (TSM 1.60%), which is the real kingpin of the AI chip market. Let's look at the reasons why TSMC is a bigger power player than Nvidia in AI chips. TSMC operates semiconductor fabrication plants across the globe, which are used to manufacture chips based on designs provided by its customers. It is worth noting that TSMC doesn't design its own chips. It simply makes chips for fabless semiconductor companies that don't have production facilities of their own. Nvidia is one such company that utilizes TSMC's facilities for manufacturing its AI chips. Equity research and brokerage firm Bernstein estimates that Nvidia could account for over a fifth of TSMC's top line this year, up significantly from around 5% to 10% a couple of years ago. That's not surprising, as Nvidia has been aggressively looking to secure more of TSMC's chipmaking capacity. Taiwan-based business newspaper Economic Daily News pointed out earlier this year that Nvidia has reportedly secured more than 70% of TSMC's advanced chip packaging capacity for 2025 in a bid to meet the robust demand for its AI GPUs. However, Nvidia is not the only company that's in line to utilize TSMC's fabs. Apple (AAPL 0.07%) is another major customer, and its contribution toward TSMC's top line is expected to be identical to that of Nvidia's in 2025. The consumer electronics giant taps TSMC to manufacture the processors that go into popular devices such as iPhones and iPads, and it has reportedly pre-booked the foundry giant's 2-nanometer (nm) capacity to mass produce chips for its next-generation iPhones. It is worth noting that Apple had reportedly booked all of TSMC's 3nm supply in 2023 to make processors for the iPhone and other devices. And now that Apple is looking to bolster the on-device AI capabilities of its devices, it is expected to move to the 2nm node so that it can pack more computing power and increase energy efficiency. Apple, however, has company, as another smartphone chip designer -- Qualcomm -- is expected to produce chips based on TSMC's 2nm process node as well. On the other hand, Nvidia's peers in the AI accelerator market are also partnering with TSMC to manufacture advanced chips. Marvell Technology, for instance, is reportedly going to adopt TSMC's sub-3nm process nodes to manufacture the next generation of its custom AI processors, which are in tremendous demand from cloud computing giants to reduce costs. Meanwhile, AMD is getting its central processing units (CPUs) and GPUs that power both servers and personal computers (PCs) manufactured by TSMC as well. Clearly, TSMC is the power player in the AI chip market. Its plants manufacture chips that go into a wide variety of applications, ranging from smartphones to PCs to data centers, and all of these markets are on track to record secular growth because of AI. Importantly, TSMC is taking steps to ensure that it can meet the incredible demand from all of these markets. TSMC's 2025 capital expenditure forecast of $38 billion to $42 billion points toward a significant increase over its 2024 outlay of $30 billion. It is going to invest 70% of its 2025 capex on advanced process technologies that are used for making AI chips, which isn't surprising. Moreover, the company has aggressive long-term expansion plans as well. It has outlined an investment of $165 billion in the U.S. to build more plants, while it is also building factories in Taiwan and Europe. These expansionary moves should enable TSMC to capitalize on the AI chip market's impressive long-term growth. According to one estimate, the global AI chipset market could clock an annual growth rate of 31% through 2033, which means that TSMC has the ability to sustain its terrific growth for years to come. Not surprisingly, analysts are expecting a pick-up in TSMC's growth going forward. That's why it would be a good idea to buy this AI stock hand over fist right now, as it seems undervalued. TSMC's earnings are expected to jump by 34% this year, which is nearly five times the projected increase in the S&P 500 index's average earnings. With the stock trading at 28 times earnings, investors are getting a good deal on TSMC based on the potential upside it could deliver.

This Brilliant New Technology Could Drive Taiwan Semiconductor to Become a $3 Trillion Company | The Motley Fool

Taiwan Semiconductor is always at the forefront of new chip technology. Taiwan Semiconductor (TSM 1.60%) is currently valued at around $1.25 trillion, making it the ninth-largest company in the world. Normally, investors don't expect these large companies to produce outstanding growth, as the larger a business gets, the more difficult it becomes for it to grow. However, TSMC has monster growth projections on the table, as well as a new technology that could drive shares much higher. Rising from today's $1.25 trillion valuation to a $3 trillion valuation would require a 140% return. However, management believes there's plenty of growth in store for Taiwan Semiconductor to meet this threshold. Taiwan Semiconductor is the world's leading semiconductor foundry. Its business strategy is to offer its clients best-in-class chip production technologies, and not compete against them. This business model has worked out incredibly well for TSMC, and its customer list ranges from Nvidia to Apple to Tesla. If you have a cutting-edge technology device, it's likely that it contains a chip manufactured by Taiwan Semiconductor. One of the reasons TSMC established itself at the top of its industry is its dedication to driving the next greatest innovation. In recent chip launches, Taiwan Semiconductor outpaced its peers by offering the most advanced technology available first. That doesn't seem to be changing, as it has some promising technology in the pipeline. Later this year, Taiwan Semiconductor is expected to launch its N2 chip node, indicating 2nm (nanometer) spacing between traces. The pre-launch demand for the N2 node exceeds that of the 3nm and 5nm offerings. This is big news for Taiwan Semiconductor, as the improvements this generation offers are substantial enough that many companies are designing their products around this new technology. The biggest improvement the N2 offers its users is energy efficiency. This has implications for the smartphone industry, with longer-lasting phones being more desirable. Additionally, the energy consumption of AI computing devices to run generative AI prompts is becoming a front-and-center topic. When N2 chips are configured at the same processing speed as 3nm chips, they consume 25% to 30% less energy. That's a massive improvement, and the energy savings from these chips may warrant upgrading to new computing units. Beyond its N2 launch, the company is slated to bring its A16 chip (1.6nm) to market in 2026. The A16 is expected to achieve an energy consumption improvement of 15% to 20% on top of the N2. A14 is the next technology TSMC is working on, but it won't reach production until 2028, so there's quite a bit of time between now and the scheduled launch date. Still, these technologies will drive further growth for TSMC and potentially propel it to a $3 trillion valuation mark in a fairly short timeframe. Management projects that, starting with 2025, its revenue will rise at nearly a 20% compound annual growth rate (CAGR) over the next five years. However, management has exceeded its own guidance every quarter this year, so it shouldn't surprise investors to see this projection increase. Should TSMC grow its revenue at a 20% CAGR, that would indicate nearly 150% growth, above the threshold needed for TSMC to rise to a $3 trillion valuation point. Additionally, Taiwan Semiconductor isn't an expensive stock, at least compared to the broader market. With a reasonable price tag and a fairly clear growth strategy, I think Taiwan Semiconductor is about as no-brainer a stock pick as it gets in today's market.

The $30 Billion Quarter: What TSMC's Blowout AI Demand Tells Us | The Motley Fool

Taiwan Semiconductor Manufacturing's share price suggests that it is undervalued. Earnings season is upon us! Last week, Taiwan Semiconductor Manufacturing (TSM 1.74%) reported financial and operating results for the second quarter of 2024. Let's explore the Q2 report from TSMC (as the company is known for short). From there, I'll dive into some broader industry trends to help explain why the company's latest quarterly result was so impressive, and more importantly, how it is set up for even further growth in the long run. TSMC is a major supplier for leading chip companies such as Nvidia, Advanced Micro Devices, and Broadcom. Moreover, the company's reach extends beyond traditional semiconductor businesses since it has also forged strong relationships with tech giants Apple and Amazon. During the second quarter, the company generated more than $30 billion in sales, thanks in large part to continued robust demand for the company's 5nm and 3nm chip nodes. While the company's revenue grew 44% year over year, steadily improving gross margins and a disciplined cost structure fueled even more acceleration for its bottom line. During the second quarter, earnings per share (EPS) were roughly $2.50 -- representing nearly 61% growth year over year. In 2025 alone, cloud hyperscalers Microsoft, Alphabet, and Amazon, in combination with social media empire Meta Platforms, are expected to collectively have up to $330 billion in capital expenditures (capex). Taking this one step further, management consulting firm McKinsey & Company forecasts that investments in AI infrastructure -- which include data center buildouts and chips -- are expected to reach $6.7 trillion by next decade. With TSMC producing more than 40% revenue growth with an estimated 60% of the global chip foundry market, it appears well-positioned to capitalize on these secular tailwinds and acquire even more market share over the next several years. To me, the simplest explanation of the blowout earnings report is that AI demand is not only strong, but it's also accelerating. While growth will fluctuate from quarter to quarter, I don't really see TSMC as a cyclical semiconductor stock at this point. Rather, the capex and infrastructure trends referenced above underscore how crucial AI growth is to the global economy at this point. The chipmaker's leading foundry services across edge devices, high-performance computing (HPC), and AI accelerators are at the center of this secular evolution. Despite the company's jaw-dropping growth and robust outlook, TSMC trades at a forward price-to-earnings multiple (P/E) of just 24. Not only is this much lower than historical levels, but it is also a meaningful discount to many other leading chip stocks, too. While skeptics may cite the cyclicality of the chip market or potential geopolitical tensions with China as part of the bear narrative, I think TSMC's current financial profile and its future trajectory speak for themselves regardless of these risks. In my eyes, the disconnect between the company's valuation and its underlying business fundamentals could suggest that investors may not fully understand or appreciate the importance of its role in the broader chip ecosystem. I see TSMC stock as a no-brainer right now, and I think the company's price action suggests it is undervalued. Investors with a long-run time horizon might want to consider scooping up shares and holding on tight as the infrastructure chapter of the AI story continues to be written. Taiwan Semiconductor Manufacturing is uniquely positioned to ride these tailwinds and sustain high levels of revenue and profit growth for years to come.

This Tech Giant Is the Best Artificial Intelligence (AI) Chip Stock to Buy Right Now | The Motley Fool

With a dominant market share and soaring profits, there is still more upside for this semiconductor stock. Taiwan Semiconductor Manufacturing (TSM 1.60%) has been at the center of the artificial intelligence (AI) chip boom by virtue of its status as the world's largest semiconductor foundry. The company, commonly known as TSMC, reported second quarter results on July 17, only to remind the market why it is one of the best ways to capitalize on the growth in AI semiconductor demand. All the major chip companies, such as Broadcom, Marvell, Nvidia, AMD, and Intel, have been using TSMC's fabrication plants to manufacture their AI chips. Moreover, the chips that go into AI-enabled smartphones are manufactured at TSMC's facilities since it counts the likes of Qualcomm and Apple as customers too. This world-class client base and the secular growth of the AI chip market allowed TSMC to deliver outstanding Q2 results and boost its full-year guidance as well. Take a closer look at the latest numbers, and you'll see why it's not too late for investors to buy this hot AI stock. TSMC reported an impressive 44% year-over-year increase in its Q2 revenue to $30.1 billion, exceeding the high end of its guidance range. Meanwhile, the company's adjusted earnings per share shot up at a much faster pace of 61%, a testament to its solid pricing power. TSMC controls 68% of the global semiconductor foundry market, well ahead of its closest rival, Samsung, which has a market share of just under 8%. The company has managed to build such a huge gap over the competition thanks to the technological lead of its process nodes. As a result, TSMC has the ability to raise the prices of its services, and that explains why its gross margin increased by more than five percentage points last quarter from the prior-year period. Importantly, TSMC is now anticipating its full-year revenue will grow 30% in 2025, up from its earlier estimate of mid-20% growth. But TSMC could end the year with an even bigger top-line jump as it has already achieved 40% year-over-year growth in the first half of 2025, and it is expecting a 38% spike in revenue in the current quarter (at the midpoint of guidance). What's worth noting here is that TSMC says its guidance takes into account the potential impact of tariffs on its business. Even then, the company has raised its full-year outlook, and it won't be surprising to see it end 2025 with a bigger-than-expected jump in revenue and earnings. In fact, TSMC's red-hot growth seems sustainable for a long time to come, considering the secular growth opportunity presented by AI. The various AI-focused end-markets that TSMC serves are on track to boom remarkably in the next five years. For instance, the investment in AI chips and computing hardware could exceed a whopping $3 trillion by 2030, according to the consulting firm McKinsey. Not surprisingly, analysts are also increasing their estimates for the company's earnings through 2027. TSMC stock has jumped an impressive 59% in the past three months. Even then, it is trading at 28 times trailing earnings as compared to the tech-laden Nasdaq 100 index's average earnings multiple of more than 32. The forward earnings multiple of 24 is even more attractive and is yet another signal of the company's continued bottom-line growth. Investors looking to add an AI stock to their portfolios should consider buying TSMC as a top pick. It has room to run higher and is trading at a discount to the broader technology sector, despite quarter after quarter of outstanding execution.