Taiwan Semiconductor (TSM +0.44%) is one of the biggest beneficiaries of the artificial intelligence revolution that nobody talks about. It’s making chips for major players, including Nvidia, Broadcom, and Advanced Micro Devices. All of these companies are competing to secure more space in data centers. Yet one company stands to benefit regardless of which company ultimately wins in the computing realm: Taiwan Semiconductor.
This makes TSMC the ultimate neutral-party investment, and I think it could be a great pick right now. I think its stock price could skyrocket over the next few years, and easily crush the market along the way.
Image source: The Motley Fool.
The AI boom is far from over
One of the biggest questions investors have with TSMC’s stock is how long the AI build-out will last. This is a fair question, as Taiwan Semiconductor will be negatively affected by falling demand. However, there are a few companies that have as good long-term visibility into potential AI spending as TSMC. It has several key industry sources sharing information, ensuring it has the proper production capacity to meet demand when the time comes.
Apparently, demand is so strong that Taiwan Semiconductor deemed it necessary to invest an additional $100 billion in its Arizona facilities. That’s a big commitment, and Taiwan Semiconductor would only do it if it thought demand would last.
When asked about the longevity of AI demand, CEO C.C. Wei stated that he believed there would be strong chip demand through at least 2029 to 2030. That’s several years of strong growth ahead, and that will bode well for the stock price.
Taiwan Semiconductor Manufacturing
Today’s Change
(0.44%) $1.84
Current Price
$420.04
Key Data Points
Market Cap
Day’s Range
$413.10 – $424.79
52wk Range
$223.70 – $479.00
Volume
9.2M
Avg Vol
14.2M
Gross Margin
63.38%
Dividend Yield
0.83%
For 2026, Wall Street analysts expect 42% revenue growth, then 32% next year. Those projections are in New Taiwan dollars, and the exchange rate to U.S. dollars could affect these figures. However, for simplicity’s sake, we’ll assume that this exchange rate stays at its current level and that its native currency growth rate translates into U.S. dollar growth. Furthermore, we’ll assign a 30% growth rate to 2028 as well.
By then, TSMC could generate NT$9.32 trillion, or about $291 billion in U.S. dollars. TSMC’s current profit margin has risen to 50%, and I think that’s sustainable considering its dominant market position. That would translate into $146 billion in profits. At TSMC’s current valuation of 29 times earnings, the company is valued at $4.2 trillion. For reference, TSMC is valued at $2.1 trillion now.
That means that Taiwan Semiconductor could double by 2028, turning $10,000 into $20,000. Few companies can sustain that level of growth in a short time, and it’s nearly guaranteed as long as AI hyperscalers continue spending at their current pace.
Keithen Drury has positions in Broadcom, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Broadcom, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.