Nvidia Set to Become TSMC's Largest Customer
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3d ago
0mins
Source: CNBC
- Customer Status Shift: Analyst estimates indicate that Nvidia is set to become TSMC's largest customer in 2025, projected to generate $33 billion in revenue, accounting for 22% of TSMC's total revenue, marking a fundamental shift in the semiconductor industry.
- Surge in AI Chip Demand: TSMC's high-performance computing (HPC) sales, which include Nvidia's AI chips, have risen from 40% in 2022 to 55%, demonstrating the significant impact of the rapidly growing AI market on its financials.
- Capital Expenditure Plans: TSMC plans to invest up to $56 billion in capital expenditures in 2025 to meet the increasing AI demand, with these investments expected to come online in 2028, reflecting the company's confidence in the long-term AI mega-trend.
- Technological Advancements and Customer Relations: The complexity of producing Nvidia's AI chips compared to Apple's drives TSMC's investment in advanced process technologies, further solidifying its leadership position in the global semiconductor manufacturing market.
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Analyst Views on TSM
Wall Street analysts forecast TSM stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for TSM is 313.46 USD with a low forecast of 63.24 USD and a high forecast of 390.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
8 Analyst Rating
7 Buy
1 Hold
0 Sell
Strong Buy
Current: 342.300
Low
63.24
Averages
313.46
High
390.00
Current: 342.300
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.
Taiwan Semiconductor: Best AI Value Stock in Market
- AI-Driven Business Growth: TSMC's chipmaking business is currently driven by AI, with the high-performance computing segment accounting for 58% of total revenue in 2025, reflecting a 48% increase from 2024, indicating strong market demand and growth potential.
- Increased Capital Expenditure: Management plans to raise capital expenditures from $41 billion in 2025 to $54 billion in 2026, demonstrating confidence in future high-growth opportunities, which is expected to further enhance shareholder value.
- Long-Term Stable Business Foundation: Since its establishment in 1987, TSMC has been at the forefront of semiconductor innovation, with smartphones and autonomous vehicles making up 29% and 5% of its business last year, ensuring the company's sustained competitiveness and market position.
- Attractive Valuation: TSMC's P/E ratio of 31 presents an appealing entry point for new investors, and combined with its leadership in the AI sector, positions it as the best AI value stock in the market.
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Long-Term Investment Potential of TSMC and CrowdStrike
- TSMC's Market Leadership: Taiwan Semiconductor Manufacturing (TSMC) holds approximately 72% market share in semiconductor manufacturing, particularly dominating advanced chips for AI-related hardware, ensuring long-term contracts with giants like Nvidia and Apple, thus providing a steady revenue stream.
- Ongoing Investment and Expansion: TSMC plans to increase capital expenditures to between $52 billion and $56 billion by 2026, demonstrating its commitment to R&D and factory development, which further solidifies its industry leadership and enhances future competitiveness.
- CrowdStrike's Customer Base: CrowdStrike protects 300 of the Fortune 500 and 543 of the Fortune 1,000 companies, with long-term contracts and high switching costs providing a stable revenue source, ensuring its longevity in the cybersecurity market.
- Cybersecurity Industry Growth Potential: According to McKinsey, the cybersecurity industry could grow to $2 trillion, making CrowdStrike's reported $1.2 billion revenue in Q3 appear modest compared to its future potential as market demand increases, highlighting its significant growth prospects.
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