TSMC Reports 36.8% Revenue Growth Driven by AI Demand
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 03 2026
0mins
Should l Buy TSM?
Source: Fool
Taiwan Semiconductor Manufacturing Co Ltd (TSMC) shares rose 3.00% in pre-market trading, reaching a 52-week high of $365.60, reflecting strong investor confidence.
The surge in TSMC's stock is attributed to the company's impressive January revenue growth of 36.8% year-over-year, reaching NT$401.26 billion, driven by robust demand for AI-related products. TSMC's optimistic outlook for nearly 30% revenue growth in 2026, primarily fueled by AI accelerators, further solidifies its leadership in the semiconductor market.
This strong performance highlights TSMC's critical role in the AI market and its ability to adapt to changing market dynamics, positioning the company for continued growth and investor interest.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy TSM?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on TSM
Wall Street analysts forecast TSM stock price to fall
8 Analyst Rating
7 Buy
1 Hold
0 Sell
Strong Buy
Current: 366.360
Low
63.24
Averages
313.46
High
390.00
Current: 366.360
Low
63.24
Averages
313.46
High
390.00
About TSM
Taiwan Semiconductor Manufacturing Co Ltd is a Taiwan-based integrated circuit foundry service provider. The Company is primarily engaged in integrated circuit manufacturing services. It offers advanced process technologies, specialised process solutions, advanced photomask and silicon stacking, and packaging-related technologies, while supporting a comprehensive design ecosystem. The Company's products serve diverse electronic sectors including artificial intelligence, high-performance computing, wired and wireless communications, automotive and industrial equipment, personal computing, information applications, consumer electronics, smart internet of things, and wearable devices.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
TSMC and US Reach Trade Agreement to Boost Semiconductor Exports
- Trade Agreement Reached: Taiwan and the US reached a trade agreement on February 13, aimed at balancing trade between the two countries, particularly in light of Taiwan's surging AI chip exports, indicating a willingness for technological cooperation.
- Tariff Reduction: The US has lowered tariffs on Taiwanese imports from 20% to 15%, aligning with rates in South Korea and Japan, which will create a more favorable export environment for TSMC, further solidifying its position in the US market.
- Investment Commitment: The Taiwanese government pledged over $250 billion in investments in US semiconductor, energy, and AI production, including TSMC's previously announced $100 billion investment in January, highlighting Taiwan's critical role in the global semiconductor supply chain.
- Analyst Rating Upgrade: On February 13, Gil Luria of D.A. Davidson initiated a Buy rating for TSMC with a $450 price target, emphasizing the company's competitive edge in advanced semiconductor manufacturing as demand continues to surge.
See More
Top AI Stocks to Watch for 2026
- Nvidia's Growth Potential: Nvidia is projected to achieve a 57% annual growth rate in 2026, despite a year-over-year decline, reflecting strong market demand, particularly as AI capital expenditures are expected to exceed $500 billion, indicating rapid industry expansion.
- TSMC's Critical Role: TSMC anticipates nearly 30% revenue growth in 2026, while AI-related chip revenue is expected to grow at a compound annual growth rate of nearly 60% from 2024 to 2029, underscoring its importance and future growth potential in the AI supply chain.
- Nebius Group's Rapid Ascent: Nebius Group's annual run rate is expected to reach $1.25 billion in 2025 and soar to between $7 billion and $9 billion by the end of 2026, showcasing its strong growth potential in the AI cloud computing market, making it a potential top stock for 2026.
- Overall AI Industry Outlook: As AI technology continues to evolve, investors will see more companies benefiting from this trend, particularly in the chip design and manufacturing sectors, which are expected to become investment hotspots in the coming years.
See More
David Tepper Doubles Down on Semiconductor Investment
- Semiconductor Investment Boost: David Tepper's Appaloosa Management aggressively added 1 million shares of Micron Technology (NASDAQ:MU) during the quarter, bringing its total holdings to 1.5 million shares valued at over $428 million, indicating strong confidence in the semiconductor sector's recovery.
- Tech Giants Trimmed: Despite the reductions, Alibaba remains Appaloosa's largest single holding at 10.88% of the total portfolio, down from 15.61% in the previous quarter, reflecting a cautious stance on Chinese tech stocks.
- Amazon and Nvidia Reductions: Appaloosa trimmed its stake in Amazon (NASDAQ:AMZN) by approximately 320,000 shares, a 12.8% decrease, while also reducing Nvidia (NASDAQ:NVDA) by 10.5%, liquidating 200,000 shares, indicating Tepper's strategic adjustments in response to market dynamics.
- Shifting Investment Strategy: Tepper appears to be moving “down the stack,” focusing on hardware components that drive AI rather than chip designers, showcasing a reassessment of hardware value and optimism about future growth potential.
See More
Nvidia's Stock Surge Amid AI Revolution
- Significant Stock Growth: Nvidia's stock has surged 700% over the past three years, driven by the acceleration of the AI revolution, which has led to double and triple-digit revenue and profit growth, with the latest fiscal year revenue surpassing $130 billion, indicating strong market demand.
- Increased Market Competition: While Nvidia remains a leader in AI chip design, it faces pressure from competitors like AMD and challenges from some customers who produce their own chips, which could impact its market share and future growth potential.
- Investor Confidence Fluctuations: Recently, investors have expressed concerns about the high valuations of AI stocks, leading Nvidia's price-to-earnings ratio to drop to its lowest level in nearly a year; however, AI spending remains robust, with expectations that the market will reach trillions in the coming years.
- Diversified Investment Strategy: Experts recommend that investors choose a variety of quality companies to minimize risk, with Nvidia being an ideal choice for growth-oriented investors, especially at current valuations, potentially providing significant wealth growth opportunities.
See More
Investors Quietly Reduce Exposure to Semiconductor Stocks
- Valuations at a Tipping Point: Despite significant gains from high-flying stocks like Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD), their stock prices are beginning to exceed the fundamentals, raising investor concerns about growth sustainability and potentially prompting a shift to less risky sectors.
- Earnings Trends Signal Caution: While quarterly reports from major chipmakers show continued revenue growth, guidance for upcoming quarters is more tempered, particularly as Intel (NASDAQ:INTC) faces execution challenges on new process nodes, which may impact its near-term competitiveness and lead investors to rebalance portfolios.
- Macro Factors Shaping Sentiment: Rising interest rates and the potential for tighter monetary policy increase the opportunity cost of holding high-multiple growth stocks, especially in the semiconductor sector, which is sensitive to future earnings growth, leading investors to navigate between high expectations and moderate growth.
- Sector Rotation Trends: Investors are increasingly drawn to sectors like energy, consumer staples, and healthcare, where earnings are less sensitive to economic swings and cash flows are more reliable, indicating a shift in focus from semiconductor stocks after years of tech-led gains, emphasizing risk management and portfolio balance.
See More
Reassessment of AI Spending Impacts Major Tech Stocks
- Market Value Loss: In 2026, major tech companies including Microsoft, Amazon, Nvidia, Apple, and Alphabet saw a combined market value drop of over $1.3 trillion due to a reassessment of AI spending, indicating investor caution regarding elevated capital expenditure plans.
- Semiconductor Industry Outlook: Despite market volatility, the semiconductor sector remains robust, with global chip sales reaching $791.7 billion in 2025 and projected to grow by 26% in 2026, positioning the industry to approach $1 trillion in annual revenue.
- Accelerating Data Center Demand: SIA CEO John Neuffer highlighted that increasing demand for data centers is driving growth in the semiconductor industry, while also noting that cyclical fluctuations are likely to persist, reflecting the dynamic nature of the market.
- Nvidia Earnings Focus: Nvidia is set to report earnings on February 25, 2026, and despite recent stock weakness, analysts like Jim Cramer have dubbed it the “GOAT,” emphasizing its competitive position and resilience in the market.
See More
TSMC and US Reach Trade Agreement to Boost Semiconductor Exports
- Trade Agreement Reached: Taiwan and the US reached a trade agreement on February 13, aimed at balancing trade between the two countries, particularly in light of Taiwan's surging AI chip exports, indicating a willingness for technological cooperation.
- Tariff Reduction: The US has lowered tariffs on Taiwanese imports from 20% to 15%, aligning with rates in South Korea and Japan, which will create a more favorable export environment for TSMC, further solidifying its position in the US market.
- Investment Commitment: The Taiwanese government pledged over $250 billion in investments in US semiconductor, energy, and AI production, including TSMC's previously announced $100 billion investment in January, highlighting Taiwan's critical role in the global semiconductor supply chain.
- Analyst Rating Upgrade: On February 13, Gil Luria of D.A. Davidson initiated a Buy rating for TSMC with a $450 price target, emphasizing the company's competitive edge in advanced semiconductor manufacturing as demand continues to surge.
See More
Top AI Stocks to Watch for 2026
- Nvidia's Growth Potential: Nvidia is projected to achieve a 57% annual growth rate in 2026, despite a year-over-year decline, reflecting strong market demand, particularly as AI capital expenditures are expected to exceed $500 billion, indicating rapid industry expansion.
- TSMC's Critical Role: TSMC anticipates nearly 30% revenue growth in 2026, while AI-related chip revenue is expected to grow at a compound annual growth rate of nearly 60% from 2024 to 2029, underscoring its importance and future growth potential in the AI supply chain.
- Nebius Group's Rapid Ascent: Nebius Group's annual run rate is expected to reach $1.25 billion in 2025 and soar to between $7 billion and $9 billion by the end of 2026, showcasing its strong growth potential in the AI cloud computing market, making it a potential top stock for 2026.
- Overall AI Industry Outlook: As AI technology continues to evolve, investors will see more companies benefiting from this trend, particularly in the chip design and manufacturing sectors, which are expected to become investment hotspots in the coming years.
See More
David Tepper Doubles Down on Semiconductor Investment
- Semiconductor Investment Boost: David Tepper's Appaloosa Management aggressively added 1 million shares of Micron Technology (NASDAQ:MU) during the quarter, bringing its total holdings to 1.5 million shares valued at over $428 million, indicating strong confidence in the semiconductor sector's recovery.
- Tech Giants Trimmed: Despite the reductions, Alibaba remains Appaloosa's largest single holding at 10.88% of the total portfolio, down from 15.61% in the previous quarter, reflecting a cautious stance on Chinese tech stocks.
- Amazon and Nvidia Reductions: Appaloosa trimmed its stake in Amazon (NASDAQ:AMZN) by approximately 320,000 shares, a 12.8% decrease, while also reducing Nvidia (NASDAQ:NVDA) by 10.5%, liquidating 200,000 shares, indicating Tepper's strategic adjustments in response to market dynamics.
- Shifting Investment Strategy: Tepper appears to be moving “down the stack,” focusing on hardware components that drive AI rather than chip designers, showcasing a reassessment of hardware value and optimism about future growth potential.
See More
Nvidia's Stock Surge Amid AI Revolution
- Significant Stock Growth: Nvidia's stock has surged 700% over the past three years, driven by the acceleration of the AI revolution, which has led to double and triple-digit revenue and profit growth, with the latest fiscal year revenue surpassing $130 billion, indicating strong market demand.
- Increased Market Competition: While Nvidia remains a leader in AI chip design, it faces pressure from competitors like AMD and challenges from some customers who produce their own chips, which could impact its market share and future growth potential.
- Investor Confidence Fluctuations: Recently, investors have expressed concerns about the high valuations of AI stocks, leading Nvidia's price-to-earnings ratio to drop to its lowest level in nearly a year; however, AI spending remains robust, with expectations that the market will reach trillions in the coming years.
- Diversified Investment Strategy: Experts recommend that investors choose a variety of quality companies to minimize risk, with Nvidia being an ideal choice for growth-oriented investors, especially at current valuations, potentially providing significant wealth growth opportunities.
See More
Investors Quietly Reduce Exposure to Semiconductor Stocks
- Valuations at a Tipping Point: Despite significant gains from high-flying stocks like Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD), their stock prices are beginning to exceed the fundamentals, raising investor concerns about growth sustainability and potentially prompting a shift to less risky sectors.
- Earnings Trends Signal Caution: While quarterly reports from major chipmakers show continued revenue growth, guidance for upcoming quarters is more tempered, particularly as Intel (NASDAQ:INTC) faces execution challenges on new process nodes, which may impact its near-term competitiveness and lead investors to rebalance portfolios.
- Macro Factors Shaping Sentiment: Rising interest rates and the potential for tighter monetary policy increase the opportunity cost of holding high-multiple growth stocks, especially in the semiconductor sector, which is sensitive to future earnings growth, leading investors to navigate between high expectations and moderate growth.
- Sector Rotation Trends: Investors are increasingly drawn to sectors like energy, consumer staples, and healthcare, where earnings are less sensitive to economic swings and cash flows are more reliable, indicating a shift in focus from semiconductor stocks after years of tech-led gains, emphasizing risk management and portfolio balance.
See More
Reassessment of AI Spending Impacts Major Tech Stocks
- Market Value Loss: In 2026, major tech companies including Microsoft, Amazon, Nvidia, Apple, and Alphabet saw a combined market value drop of over $1.3 trillion due to a reassessment of AI spending, indicating investor caution regarding elevated capital expenditure plans.
- Semiconductor Industry Outlook: Despite market volatility, the semiconductor sector remains robust, with global chip sales reaching $791.7 billion in 2025 and projected to grow by 26% in 2026, positioning the industry to approach $1 trillion in annual revenue.
- Accelerating Data Center Demand: SIA CEO John Neuffer highlighted that increasing demand for data centers is driving growth in the semiconductor industry, while also noting that cyclical fluctuations are likely to persist, reflecting the dynamic nature of the market.
- Nvidia Earnings Focus: Nvidia is set to report earnings on February 25, 2026, and despite recent stock weakness, analysts like Jim Cramer have dubbed it the “GOAT,” emphasizing its competitive position and resilience in the market.
See More
