TSMC's Record-Breaking Market Cap: Navigating the AI Chip Giant's Growth Trajectory

TSMC, a Taiwan-based chip manufacturer, has surpassed $1 trillion in market value, making it the first Asian company to do so since PetroChina in 2007. The surge is driven by strong demand for AI chips from customers like Apple and Nvidia, and a bullish forecast that suggests the rally may continue. Goldman Sachs and JPMorgan analysts expect TSMC to benefit from robust AI demand, price hikes, and solid capex.

Taiwan Semiconductor Manufacturing Co. (TSMC) has reached a significant milestone, becoming the first Asian company to surpass $1 trillion in market value. The achievement, announced on July 17, 2025, reflects the robust demand for AI chips and a bullish outlook from financial analysts.

TSMC's market capitalization reached $1 trillion, driven by a 49% surge in its shares since April, according to Bloomberg [1]. The company's American depositary receipts (ADRs) were valued at around $1.2 trillion as of the close on Friday, making it the first Asian stock to reach the trillion-dollar milestone since PetroChina briefly did so in 2007 [1].

The surge in TSMC's stock price can be attributed to strong demand for AI chips from major customers such as Apple Inc. and Nvidia Corp. The company's second-quarter earnings report, released on July 17, 2025, highlighted its strong financial performance. TSMC reported a net income surge of 61% year-over-year to NT$398.3 billion, and revenue for the quarter jumped 39% to NT$933.2 billion, with high-performance computing, which includes AI and 5G applications, contributing 60% of revenue [2].

Goldman Sachs Group Inc. analysts, including Bruce Lu, noted that TSMC's tone towards advanced node demand is even more positive with AI customers showing no signs of demand slowdown. They expect to see a higher magnitude of price hike in 2026 [1]. JPMorgan Chase & Co. analysts, including Gokul Hariharan, highlighted that strong AI spending by TSMC's customers and the upside of wafer prices will help mitigate the negative impact of a strong Taiwan dollar and help add resilience to the company's gross margins [1].

Looking ahead, TSMC's leading position in the semiconductor industry, controlling nearly 67% of semiconductor manufacturing, provides it with significant pricing power. The company is the first to introduce the third-party foundry model, granting it dominance in the chip foundry sector [2]. TSMC's CEO, C.C. Wei, acknowledged the potential impact of tariffs on the industry but remained optimistic about the strong demand for AI chips. The company expects its full-year 2025 revenue to rise by around 30% in U.S. dollar terms, supported by growth in AI and advanced technologies [3].

While tariff uncertainty remains, TSMC has upped its guidance, given the strong demand for AI chips it is seeing. The company continues to be an AI infrastructure winner, as it is the world's leading maker of advanced chips for companies like Nvidia and Apple [3]. TSMC's stock remains attractively valued, trading at a forward price-to-earnings (P/E) ratio of 26 times based on analysts' 2025 estimates and price/earnings-to-growth ratio (PEG) of around 0.7. Stocks with PEG ratios below 1 are typically considered undervalued [3].

References:
[1] https://finance.yahoo.com/news/tsmc-joins-trillion-dollar-club-023919891.html
[2] https://www.ainvest.com/news/tsmc-market-hits-1-trillion-optimism-ai-demand-2507/
[3] https://www.fool.com/investing/2025/07/21/taiwan-semiconductor-manufacturing-shares-rise-on/