Hyperscalers Set to Boost Cloud Spending Significantly
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 16 2026
0mins
Source: Fool
- Spending Overview: The five largest hyperscalers, including Amazon, Alphabet, Microsoft, Meta, and Oracle, are projected to budget over $700 billion by 2026, reflecting a strong demand for building AI data centers and driving growth in related sectors.
- Capital Expenditure Growth: Amazon plans to spend $200 billion in 2026, a 56% increase from $128.3 billion in 2025; Alphabet's spending is expected to reach $180 billion, with a staggering 97% year-over-year growth, significantly enhancing its market competitiveness.
- Surge in Chip Demand: These five companies are set to spend over $450 billion on GPUs, CPUs, and other AI accelerator chips in 2026, creating substantial market opportunities for chipmakers, particularly for leading firms like Taiwan Semiconductor Manufacturing Company (TSMC).
- Long-Term Growth Outlook: TSMC has raised its annual revenue growth forecast for 2024-2029 from 20% to 25%, and with the rapid increase in AI chip demand, the potential for gross margin and profit growth in the coming years is substantial, making it a valuable investment despite its stock reaching all-time highs.
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: 421.070
Low
63.24
Averages
313.46
High
390.00
Current: 421.070
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.
Harvard University Stock Portfolio 2026 Analysis
- Harvard's Holdings: As of the end of Q1, Harvard Management's investment in Taiwan Semiconductor (NYSE:TSM) reached $232,102,708, making it the university's largest holding, reflecting strong confidence in the company's future growth potential.
- Beneficiary of AI Revolution: TSMC is the world's leading semiconductor manufacturer, with 74% of its wafer revenue coming from advanced nodes of 7nm and below, establishing an unmatched position in the AI chip market due to its scale and technological superiority.
- Strong Financial Performance: TSMC's latest quarter saw a gross margin increase of 7.4 percentage points year-over-year, with an operating margin of 58.1%, showcasing its strong pricing power and efficient cost management, with full-year revenue growth expected to exceed 30%.
- Leading Technological Innovation: TSMC has commenced mass production of 2nm chips with initial yields of 70-80%, significantly ahead of competitors, and the N2 node's performance and energy efficiency improvements will further solidify its market leadership.
See More
SpaceX IPO Underwhelms Despite High Valuation
- IPO Performance: SpaceX's IPO was priced at $135 per share, closing at approximately $160 on its first day, reflecting a modest 19% increase, which contrasts sharply with historical IPOs that often double, indicating market caution regarding its future profitability.
- Market Valuation: On its debut, SpaceX achieved a market cap of $2.1 trillion, making it the seventh largest company globally, just behind Taiwan Semiconductor, highlighting its significant impact in the aerospace sector but raising concerns about its ongoing losses.
- Index Changes: Due to SpaceX's size and popularity, the Nasdaq-100 plans to include it in about 15 days, which will lead index funds to buy the stock, creating additional demand that may support its price in the near term.
- Business Outlook: While SpaceX's Starlink business is profitable, its substantial R&D investments in space exploration and AI keep it in the red, prompting investors to carefully assess its long-term profitability and associated market risks.
See More
SpaceX IPO Sparks Market Interest Amid Size Concerns
- Market Performance Analysis: SpaceX's IPO was priced at $135 per share, closing at approximately $160 on its first day, reflecting a 19% increase; while this performance is less impressive compared to historical IPOs, its market cap soared to $2.1 trillion, making it the sixth-largest company globally, indicating market confidence in its future.
- Index Inclusion Dynamics: With SpaceX's public listing, the Nasdaq-100 is expected to include it within 15 days, which will lead index funds to purchase the stock, thereby increasing demand and potentially driving up the share price, showcasing the market's capacity to absorb large IPOs.
- R&D Investment Pressure: Despite SpaceX's leadership in the space industry, its substantial R&D expenditures and investments in the AI product Grok suggest it may continue to operate at a loss in the short term, prompting investors to carefully assess its long-term profitability.
- Investor Risk Assessment: Although SpaceX boasts a market cap of $2.1 trillion, it is still viewed as a money-losing startup, making it more suitable for risk-averse investors to hold indirectly through diversified index funds, while aggressive growth investors should consider its potential as a long-term hold.
See More
Bank of America Upgrades Intel to Buy Amid AI Shift
- Significant Rating Upgrade: On June 11, Bank of America's analyst Vivek Arya upgraded Intel from underperform to buy, raising the price target from $96 to $135, reflecting confidence in Intel's turnaround potential despite the stock having tripled in 2026.
- Optimistic Market Outlook: Bank of America projects that the server processor market will grow from $125 billion to $170 billion by 2030, with Intel expected to capture about 25% of this market share, indicating a significant increase in demand for central processors in the AI era.
- Data Center Revenue Growth: In Q1 2026, Intel's data center and AI revenue rose 22% year-over-year to approximately $5.1 billion, far exceeding the 1% growth in its PC chip business, showcasing the company's strong performance and shifting market demand in the AI sector.
- Foundry Business Risks: Intel is striving to become a formidable contract chipmaker, with external foundry revenue at just $174 million in Q1, and the overall foundry segment still losing billions; however, securing clients like Apple and MediaTek could provide a new growth engine if successful.
See More
Bank of America Upgrades Intel to Buy, Skipping Middle Rating
- Significant Rating Upgrade: Bank of America analyst Vivek Arya upgraded Intel from 'Underperform' to 'Buy', raising the price target from $96 to $135, reflecting optimism about AI driving increased spending on central processors and indicating strong market confidence in Intel's turnaround.
- Market Size Expectations: Bank of America projects that the server processor market will grow from $125 billion to $170 billion by 2030, with Intel expected to capture approximately 25% of this market share, highlighting the company's reasserted core position in the AI era.
- Financial Performance Support: In Q1 2026, Intel's data center and AI revenue rose 22% year-over-year to $5.1 billion, significantly outpacing the 1% growth in its PC chip segment, demonstrating strong performance and increasing demand in the AI sector.
- Manufacturing Capability Challenges: While Intel aims to become a more competitive foundry, its external foundry revenue was only $174 million, and the overall foundry business continues to incur losses, indicating significant challenges in catching up with Taiwan Semiconductor.
See More
Taiwan Semiconductor: A Giant in the AI Wave
- Market Share Advantage: Taiwan Semiconductor controls approximately 62% of the global foundry market and over 90% of advanced nodes at 7nm and below, positioning it as an unmatched leader in AI chip manufacturing, with clients like Apple and Nvidia relying on its production capabilities, thereby ensuring its market dominance.
- Strong Financial Performance: In Q1 2026, TSMC reported a 40.6% year-over-year revenue increase to $35.9 billion, with a gross margin of 66.2% and an operating margin of 58.1%, indicating the company's robust pricing power and ability to effectively respond to market demand fluctuations.
- Increased Capital Expenditure: To meet rising demand, TSMC plans to raise capital spending to between $52 billion and $56 billion in 2026, a 32% year-over-year increase, reflecting the company's confidence in future growth and its critical role in the AI market.
- Investor Attention: Despite TSMC's dominant position, Eagle Point Capital warns that rapid technological changes may pose adaptation challenges, urging investors to monitor the company's ongoing innovation capabilities to avoid the fate of other once-dominant firms.
See More
Harvard University Stock Portfolio 2026 Analysis
- Harvard's Holdings: As of the end of Q1, Harvard Management's investment in Taiwan Semiconductor (NYSE:TSM) reached $232,102,708, making it the university's largest holding, reflecting strong confidence in the company's future growth potential.
- Beneficiary of AI Revolution: TSMC is the world's leading semiconductor manufacturer, with 74% of its wafer revenue coming from advanced nodes of 7nm and below, establishing an unmatched position in the AI chip market due to its scale and technological superiority.
- Strong Financial Performance: TSMC's latest quarter saw a gross margin increase of 7.4 percentage points year-over-year, with an operating margin of 58.1%, showcasing its strong pricing power and efficient cost management, with full-year revenue growth expected to exceed 30%.
- Leading Technological Innovation: TSMC has commenced mass production of 2nm chips with initial yields of 70-80%, significantly ahead of competitors, and the N2 node's performance and energy efficiency improvements will further solidify its market leadership.
See More
SpaceX IPO Underwhelms Despite High Valuation
- IPO Performance: SpaceX's IPO was priced at $135 per share, closing at approximately $160 on its first day, reflecting a modest 19% increase, which contrasts sharply with historical IPOs that often double, indicating market caution regarding its future profitability.
- Market Valuation: On its debut, SpaceX achieved a market cap of $2.1 trillion, making it the seventh largest company globally, just behind Taiwan Semiconductor, highlighting its significant impact in the aerospace sector but raising concerns about its ongoing losses.
- Index Changes: Due to SpaceX's size and popularity, the Nasdaq-100 plans to include it in about 15 days, which will lead index funds to buy the stock, creating additional demand that may support its price in the near term.
- Business Outlook: While SpaceX's Starlink business is profitable, its substantial R&D investments in space exploration and AI keep it in the red, prompting investors to carefully assess its long-term profitability and associated market risks.
See More
SpaceX IPO Sparks Market Interest Amid Size Concerns
- Market Performance Analysis: SpaceX's IPO was priced at $135 per share, closing at approximately $160 on its first day, reflecting a 19% increase; while this performance is less impressive compared to historical IPOs, its market cap soared to $2.1 trillion, making it the sixth-largest company globally, indicating market confidence in its future.
- Index Inclusion Dynamics: With SpaceX's public listing, the Nasdaq-100 is expected to include it within 15 days, which will lead index funds to purchase the stock, thereby increasing demand and potentially driving up the share price, showcasing the market's capacity to absorb large IPOs.
- R&D Investment Pressure: Despite SpaceX's leadership in the space industry, its substantial R&D expenditures and investments in the AI product Grok suggest it may continue to operate at a loss in the short term, prompting investors to carefully assess its long-term profitability.
- Investor Risk Assessment: Although SpaceX boasts a market cap of $2.1 trillion, it is still viewed as a money-losing startup, making it more suitable for risk-averse investors to hold indirectly through diversified index funds, while aggressive growth investors should consider its potential as a long-term hold.
See More
Bank of America Upgrades Intel to Buy Amid AI Shift
- Significant Rating Upgrade: On June 11, Bank of America's analyst Vivek Arya upgraded Intel from underperform to buy, raising the price target from $96 to $135, reflecting confidence in Intel's turnaround potential despite the stock having tripled in 2026.
- Optimistic Market Outlook: Bank of America projects that the server processor market will grow from $125 billion to $170 billion by 2030, with Intel expected to capture about 25% of this market share, indicating a significant increase in demand for central processors in the AI era.
- Data Center Revenue Growth: In Q1 2026, Intel's data center and AI revenue rose 22% year-over-year to approximately $5.1 billion, far exceeding the 1% growth in its PC chip business, showcasing the company's strong performance and shifting market demand in the AI sector.
- Foundry Business Risks: Intel is striving to become a formidable contract chipmaker, with external foundry revenue at just $174 million in Q1, and the overall foundry segment still losing billions; however, securing clients like Apple and MediaTek could provide a new growth engine if successful.
See More
Bank of America Upgrades Intel to Buy, Skipping Middle Rating
- Significant Rating Upgrade: Bank of America analyst Vivek Arya upgraded Intel from 'Underperform' to 'Buy', raising the price target from $96 to $135, reflecting optimism about AI driving increased spending on central processors and indicating strong market confidence in Intel's turnaround.
- Market Size Expectations: Bank of America projects that the server processor market will grow from $125 billion to $170 billion by 2030, with Intel expected to capture approximately 25% of this market share, highlighting the company's reasserted core position in the AI era.
- Financial Performance Support: In Q1 2026, Intel's data center and AI revenue rose 22% year-over-year to $5.1 billion, significantly outpacing the 1% growth in its PC chip segment, demonstrating strong performance and increasing demand in the AI sector.
- Manufacturing Capability Challenges: While Intel aims to become a more competitive foundry, its external foundry revenue was only $174 million, and the overall foundry business continues to incur losses, indicating significant challenges in catching up with Taiwan Semiconductor.
See More
Taiwan Semiconductor: A Giant in the AI Wave
- Market Share Advantage: Taiwan Semiconductor controls approximately 62% of the global foundry market and over 90% of advanced nodes at 7nm and below, positioning it as an unmatched leader in AI chip manufacturing, with clients like Apple and Nvidia relying on its production capabilities, thereby ensuring its market dominance.
- Strong Financial Performance: In Q1 2026, TSMC reported a 40.6% year-over-year revenue increase to $35.9 billion, with a gross margin of 66.2% and an operating margin of 58.1%, indicating the company's robust pricing power and ability to effectively respond to market demand fluctuations.
- Increased Capital Expenditure: To meet rising demand, TSMC plans to raise capital spending to between $52 billion and $56 billion in 2026, a 32% year-over-year increase, reflecting the company's confidence in future growth and its critical role in the AI market.
- Investor Attention: Despite TSMC's dominant position, Eagle Point Capital warns that rapid technological changes may pose adaptation challenges, urging investors to monitor the company's ongoing innovation capabilities to avoid the fate of other once-dominant firms.
See More
