Taiwan Semiconductor Manufacturing Co. (TSMC) has raised its capital expenditure guidance to $52–56 billion for 2025, underscoring management’s conviction in an AI-driven buildout that extends through at least 2028. The new guidance follows a full utilization of advanced N2, N3 and N5 process nodes and accelerated capacity scaling for advanced packaging. With gross profit margin expected to expand to 63–65% in 2026, TSMC’s board projects a 25% compound annual revenue growth rate through 2029. Such a sustained investment program positions the company to capture the insatiable demand for logic chips in AI datacenters, where capex is forecast to grow at a 38% annual clip from 2025 to 2030.

In its fourth-quarter earnings release, TSMC reported a 26% year-over-year revenue increase in U.S. dollars and guided for nearly 30% growth in 2026. The outlook reflects continued strength in AI-related orders from leading customers across cloud, automotive and high-performance computing. Despite this exceptional growth profile, TSMC trades at approximately 24 times forward earnings, below the 30-times multiple typical of big-tech peers and only modestly above the 22.3-times S&P 500 average. Given consensus forecasts for sustained mid-20s percentage revenue growth well beyond 2026, the stock offers investors a ‘picks and shovels’ play on the multi-year generative AI expansion at an attractive valuation.