This Artificial Intelligence (AI) Giant Is Up 72% Since the Start of 2025, and It Looks Even More Attractive in 2026 (Hint: Not Nvidia)
Publish Date: 2026-01-31 13:35:00
Source Domain: www.nasdaq.com
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Strong AI and Semiconductor Growth: AI stocks, particularly semiconductor stocks, had a strong year in 2025, driven by companies like Nvidia and Broadcom. Taiwan Semiconductor Manufacturing (TSMC) outperformed these companies, with its stock jumping 72% since the start of 2025.
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TSMC’s Leadership in Semiconductors: TSMC is the world’s leading contract semiconductor manufacturer, with a dominant market share of 72% in 2025. Its technology and manufacturing capabilities have attracted significant customers, creating a virtuous cycle for revenue growth.
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Buoyant Demand and Pricing Strategies: The high demand for AI chips enabled TSMC to raise prices on key chips and introduce planned annual price hikes through 2029. It also set a premium on its next-generation processes due to high demand.
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Aggressive Investment and Future Outlook: TSMC plans to increase its 2026 capital expenditures by 32%, with investments focused on bolstering its manufacturing capacity and R&D. This strategic investment is expected to lead to accelerated revenue growth and higher margins.
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Attractive Valuation and Potential for Growth: Despite its robust performance, TSMC trades at less than 24 times forward earnings, making it attractive compared to peers like Broadcom and Nvidia. The company forecasts long-term growth at a compound annual rate of 25% from 2024 through the end of the decade.
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Investor Considerations: Although TSMC is performing well, The Motley Fool Stock Advisor team didn’t select it as one of the top 10 stocks for investors to buy now, citing other potential high-return opportunities historically recognized by their service.
