TSMC Stock Poised for 5-Year Surge as AI Demand Fuels Growth

Taiwan Semiconductor Manufacturing (TSMC) is poised to continue soaring over the next five years due to its critical role in the artificial intelligence (AI) pipeline. TSMC's semiconductors power data centers, which enable AI training and deployment. The company expects AI accelerator revenue to double this year and achieve a mid-40% compound annual growth rate until 2029, boosting its already impressive revenue growth. With major AI players relying on TSMC, it is uniquely positioned to benefit from the industry's natural growth and maintain its dominance in the next five years.

Taiwan Semiconductor Manufacturing Company (TSMC) is set to continue its upward trajectory over the next five years, driven by its pivotal role in the artificial intelligence (AI) ecosystem. TSMC's semiconductors are integral to powering data centers, which are essential for AI training and deployment. The company's recent financial performance and future projections underscore its dominant position in the AI pipeline.

TSMC recently raised its outlook for 2025 revenue growth, forecasting sales to increase by about 30% in US dollar terms [1]. This optimism is fueled by strong demand for AI and high-performance computing (HPC) applications, which have been driving TSMC's performance. The company reported a 60.7% year-over-year increase in net profit for the second quarter, surpassing market expectations [2].

TSMC's AI accelerator revenue is expected to double this year, with a projected mid-40% compound annual growth rate (CAGR) until 2029. This growth is likely to be sustained by the increasing reliance of major AI players on TSMC's advanced processors. The company's dominant position in the semiconductor industry, with a 67% market share, ensures pricing power and profit margins [3].

Despite geopolitical risks and currency fluctuations, TSMC's structural advantages—technological leadership, unmatched scale, and AI/HPC demand resilience—make it a compelling investment opportunity. The company's 90%+ market share in nodes below 10nm ensures pricing power and profit margins, even in the face of U.S. tariffs and a strong Taiwan dollar [2].

TSMC's expansion efforts, including plans to establish manufacturing plants in Japan, Germany, and the United States, further bolster its growth prospects. The company's significant barriers to entry, such as the complexity and capital intensity of semiconductor manufacturing, help maintain its dominant position [3].

Looking ahead, TSMC is primed for growth due to its competitive advantages, expansion efforts, and significant barriers to entry. Brokers predict TSMC stock's average short-term price target at $244.75, reflecting a 3% increase from the last closing price of $237.56, with the highest target standing at $270, suggesting a potential upside of 13.7% [3].

References:
[1] https://www.bloomberg.com/news/articles/2025-07-17/tsmc-profit-surges-again-after-ai-drives-big-jump-in-sales
[2] https://www.ainvest.com/news/tsmc-shares-rise-2-7-raising-revenue-growth-outlook-2507/
[3] https://finance.yahoo.com/news/3-reasons-buy-tsmc-stock-190000067.html