AI Giant Surges 72% in 2025, Promises Growth in 2026 (Not Nvidia)

Taiwan Semiconductor Manufacturing Company (TSMC) has emerged as a leader in the semiconductor industry, achieving remarkable growth in 2025. The company’s stock surged by 72% since the start of the year, with positive momentum expected to continue into 2026. This trend has cemented TSMC’s position in the booming artificial intelligence (AI) sector.

TSMC’s Market Dominance

As the largest contract semiconductor manufacturer globally, TSMC holds a significant 72% market share as of 2025. This dominance has been reinforced by increased investments from major clients such as Nvidia and Broadcom, who leverage TSMC’s advanced manufacturing capabilities.

Remarkable Fourth-Quarter Results

The fourth-quarter earnings results announced in January indicated robust financial health, further enhancing TSMC’s attractiveness to investors. The company has instituted price hikes on key chips responsible for approximately 75% of its revenue. Plans for annual price increases are also projected through 2029.

Financial Outlook for 2026

Looking ahead, management has set its capital expenditures for 2026 between $52 billion and $56 billion. This marks a 32% increase at the midpoint and reflects the company’s strategic investment in expanding capacity and technology. Additionally, TSMC has revised its five-year compound annual growth rate (CAGR) forecast from 20% to 25%, following a notable 36% growth in 2025.

• Projected annual growth of approximately 22.4% through 2030.
• Anticipation of accelerated depreciation expenses.
• Strong pricing power to maintain high gross margins.

Competitor Comparison

TSMC maintains an attractive valuation, trading at nearly 24 times forward earnings. This is notably lower than competitors like Broadcom and Nvidia, whose earnings multiples stand at 41 and 32 times, respectively.

Conclusion

TSMC’s impressive performance in 2025 and optimistic projections for 2026 highlight its ongoing growth potential in the AI-driven semiconductor market. With strong market fundamentals and an effective pricing strategy, TSMC is poised for continued success in the upcoming year.