TSMC(US:TSM) The Motley Fool·2026-01-01 10:48Core Viewpoint - Taiwan Semiconductor Manufacturing Company (TSMC) is highlighted as a leading investment opportunity in the AI sector, with strong growth potential despite its already significant market position. Group 1: Company Overview - TSMC is the world's largest foundry, holding approximately 72% of the global foundry market share by revenue as of Q3 2025, with Samsung as the closest competitor at 7% [5] - The company has a market capitalization of $1.6 trillion, with a current stock price of $303.88 and a gross margin of 57.75% [6] Group 2: Market Position and Growth - TSMC has increased its market share from 65% in mid-2024 amid rising demand for AI chips, indicating its strong competitive position [6] - The company is expected to continue benefiting from Nvidia's substantial order backlog of $500 billion, which is likely to drive TSMC's revenue growth [9][12] Group 3: Financial Metrics - TSMC's price-to-earnings ratio is just under 30 times the full-2025 earnings estimates, with analysts projecting an average earnings growth of nearly 29% annually over the next three to five years [13] - The price/earnings-to-growth (PEG) ratio of approximately 1 suggests that TSMC is attractively valued at its current price, making it a compelling investment [14] Group 4: Strategic Partnerships - TSMC has a close partnership with Nvidia, which is crucial for the production of advanced graphics processing units (GPUs), including upcoming architectures like Rubin [8][11]