TSMC: The Bull Run Has Only Just Begun

The semiconductor industry is no stranger to cycles of innovation and disruption, but one company has consistently rewritten the rules: Taiwan Semiconductor Manufacturing Company (TSMC). As of 2025, TSMC isn't just surviving—it's thriving, fueled by an insatiable global demand for AI-driven chips. With its dominance in advanced manufacturing, strategic global investments, and a valuation that screams “buy,” TSMC is positioned to outperform for years to come. Let's break down why this stock deserves a prime spot in your portfolio.

A Manufacturing Empire Built on AI

TSMC's second-quarter 2025 results were nothing short of staggering. Net profit surged 61% year-on-year to NT$398.27 billion, while revenue hit NT$933.80 billion—a 38.65% increase. This isn't just growth; it's a seismic shift in the industry. The driver? AI. High-performance computing (HPC) chips now account for 59% of TSMC's wafer revenue, up from 51% in 2024. Advanced nodes below 7nm—critical for AI accelerators—are powering this surge, with 74% of TSMC's wafer revenue now tied to cutting-edge processes.

But TSMC's magic isn't just in the silicon—it's in the packaging. The company's Chip-on-Wafer-on-Substrate (CoWoS) technology, which enables the integration of multiple chips into a single, powerful system, is the holy grail for AI workloads. CoWoS production has already hit 70,000 wafers per month and is set to scale to 90,000 by 2026. This is the kind of technological moat that keeps competitors in the dust.

Global Expansion: A $165 Billion Bet on the Future

TSMC's recent $100 billion expansion in the U.S.—bringing its total investment to $165 billion—is a masterstroke. The plan includes three new fabrication plants, two advanced packaging facilities, and a massive R&D center in Arizona. This isn't just about geopolitics; it's about proximity to its largest customers, including NVIDIA and Apple. The project is expected to generate hundreds of billions in AI-driven semiconductor value and create 40,000 construction jobs and tens of thousands of high-tech roles.

This expansion isn't a one-trick pony. TSMC is replicating this playbook in Japan and Germany, ensuring it's not just a U.S. play but a global infrastructure play. With AI demand projected to grow at a 7.5% compound annual rate through 2030, TSMC's capital expenditures ($38–42 billion in 2025) are a small price to pay for securing the next decade of dominance.

Valuation That Doesn't Reflect the Hype

Here's where TSMC shines brightest: its valuation. At a forward P/E of 22.48x, it trades at a discount to the semiconductor industry average of 27.39x and AI peers like NVIDIA (34.04x) and AMD (30.83x). This discrepancy makes little sense when you consider TSMC's role as the indispensable enabler of the AI revolution.

The numbers don't lie: TSMC's gross margins hover around 58.6%, and operating margins approach 49%. Its return on equity consistently exceeds 25%, and its PEG ratio is well below 1—a rare feat for a company with this kind of growth. Even its P/S ratio is compelling, given its $1.03 trillion market cap and revenue growth fueled by AI.

Why This Is a Buy-Now Story

TSMC's dominance in the 67.6% global foundry market share (per Q1 2025) isn't just a statistic—it's a structural advantage. As AI chips become more complex, the gap between TSMC and its nearest rival, Samsung, widens. Samsung's 7.7% market share pales in comparison to TSMC's scale and technological depth.

Moreover, TSMC's ecosystem integration is unmatched. It's the manufacturing backbone for NVIDIA's H100 GPUs, Apple's M3 chips, and AMD's Instinct accelerators. These aren't just customers—they're partners in a virtuous cycle of innovation and demand.

The Bottom Line: A No-Brainer for Long-Term Gains

TSMC's bull case is built on three pillars: technological leadership, strategic global expansion, and undervaluation relative to its growth potential. With AI infrastructure spending set to explode, TSMC is the one stock that combines the urgency of a growth play with the stability of a blue-chip.

For investors, the message is clear: TSMC isn't just riding the AI wave—it's the lighthouse guiding the industry. At current valuations, this is a stock to buy, hold, and watch soar. The bull run has only just begun.