Since January 2025, Taiwan Semiconductor Manufacturing Company has climbed 72%, outperforming peers in contract chip fabrication. Management has raised its five-year revenue growth target to a 25% compound annual growth rate, reflecting robust demand for AI processors. In its latest briefing, TSMC projected capital expenditures of $40–45 billion for 2026, up from $36 billion in 2025, to expand advanced 3-nanometer and 2-nanometer capacity.

At under 24 times forward earnings, TSMC trades below several fabless and foundry peers, whose multiples exceed 30x. Analysts note that the company’s price-to-earnings discount belies its 21% revenue growth and 35% net income increase over the past year, as well as sustained 50% gross margins. With consensus estimates forecasting double-digit revenue gains through 2026, the stock appears undervalued given its market leadership.

TSMC controls roughly 72% of the global contract semiconductor manufacturing market, serving as the exclusive foundry for multiple leading AI chip designers. AI-related revenue is expected to grow at a 60% CAGR from 2024 to 2029, driven by datacenter spending. In 2026, management guides for approximately 30% year-over-year revenue growth in its AI and high-performance computing segment, underscoring its pivotal role in the industry’s next wave.

To mitigate geopolitical risk and meet surging demand, TSMC is scaling its Arizona wafer fab to full production by mid-2026, targeting an annual capacity of 90,000 12-inch equivalent wafers. The U.S. expansion complements its Taiwanese manufacturing hubs and supports critical U.S. government incentives. This geographic diversification, alongside a planned €3 billion investment in advanced packaging, positions TSMC to sustain its technology leadership through 2030.