About this content About Angela Harmantas Angela Harmantas is an Editor at Proactive. She has over 15 years of experience covering the equity markets in North America, with a particular focus on junior resource stocks. Angela has reported from numerous countries around the world, including Canada, the US, Australia, Brazil, Ghana, and South Africa for leading trade publications. Previously, she worked in investor relations and led the foreign direct investment program in Canada for the Swedish government ...

There is ample evidence suggesting that TSMC's growth could accelerate next year. For instance, TSMC's production capacity of the advanced 2-nanometer (nm) node that will go into production in 2026 is anticipated to double. What's more, TSMC has reportedly sold out its entire 2nm production capacity for 2026.The chips fabricated by TSMC for customers such as Nvidia (NASDAQ: NVDA), AMD , Apple , Broadcom , Qualcomm , and others, go into all the verticals of the semiconductor industry. This is why the company ...

Key Takeaways TSM's gross margin rose 170 bps to 59.5% in Q3 2025 despite higher overseas fab expenses.TSMC guides Q4 gross margin of 59%-61%, with the midpoint showing a 100 bps YoY increase.Taiwan Semiconductor expects scale, automation and government incentives to offset cost gaps.Taiwan Semiconductor Manufacturing Company (TSM) , also known as TSMC, continues to report healthy profitability even as it builds new fabs outside Taiwan. The contract chipmaker is building new fabs across the United States, J ...

Core Viewpoint - Taiwan Semiconductor Manufacturing Company (TSMC) is well-positioned to benefit from the increasing sales of top chipmakers in the AI sector, with significant growth expected in global data center spending [1][3][10]. Industry Overview - Nvidia projects that annual global spending on data centers will reach between $3 trillion and $4 trillion by 2030, raising questions among investors about the feasibility of such optimistic forecasts [2]. - The AI chip market is competitive, with Nvidia leading but facing challenges from AMD and Broadcom, which may capture some of Nvidia's market share due to their performance and value propositions [4]. Company Position - TSMC is a leading chip foundry capable of producing advanced chips, holding a majority share of the third-party chip foundry market, and is the primary manufacturer for major tech companies [6][5]. - The company is expanding its manufacturing capacity globally, with a $165 billion investment in the U.S., which is already yielding results as Nvidia's Blackwell chips are being produced at TSMC's Arizona facility [8][9]. Technological Advancements - TSMC has developed cutting-edge 3-nanometer chip technology and is set to launch 2-nanometer chips, which are expected to be 25% to 30% more energy-efficient than their 3-nanometer counterparts [9][10]. - The focus on energy efficiency is crucial for AI data center operators, providing TSMC with a competitive edge and the ability to charge a premium for its services [10]. Financial Metrics - TSMC's current market capitalization is $1.512 trillion, with a gross margin of 57.75% and a dividend yield of 0.99% [8]. - The stock is considered reasonably priced at 22 times next year's earnings, especially given its rapid growth compared to other companies in the AI sector [11][12]. Investment Outlook - TSMC is expected to be one of the best performers in the next five years, second only to the leading company in AI chip design, whether that be Nvidia, Broadcom, or AMD [12].

Group 1 - TSMC and ASML are critical players in the semiconductor market, with TSMC being the largest contract chipmaker and ASML the leading producer of lithography systems, including the only extreme ultraviolet (EUV) systems [1][8] - TSMC has outpaced competitors like Intel and Samsung in adopting ASML's EUV systems, leading to significant stock growth, with TSMC's stock nearly tripling and ASML's stock more than doubling over the past five years [2][4] - TSMC's revenue grew at a CAGR of 24% from 2020 to 2024, driven by demand for 5nm and 3nm chips, and the expansion of the high-performance computing (HPC) market [4][6] Group 2 - In Q3 2025, TSMC generated 60% of its revenue from 3nm and 5nm nodes, with 57% from the HPC market and 30% from smartphones, leading to an upward revision of its full-year revenue growth guidance to mid-30% [6][7] - Analysts project TSMC's revenue and EPS to grow at a CAGR of 24% and 27% from 2024 to 2027, supported by the AI market expansion and new technology developments [7] - TSMC's advanced packaging technologies and AI-driven process improvements have enhanced its gross margins, while the establishment of overseas fabs aims to mitigate geopolitical risks [5][6]

Group 1: Nvidia - Nvidia's stock has seen significant growth due to the artificial intelligence arms race, with $500 billion in orders for data center GPUs through the end of 2026 [3][4] - The company generated $165 billion in revenue over the past 12 months, indicating strong financial performance [4] - Nvidia's growth potential makes it an attractive buy, especially with anticipated massive buying before the end of the year [4] Group 2: Taiwan Semiconductor - Taiwan Semiconductor (TSMC) is the leading chip foundry and will benefit from increased chip demand driven by Nvidia and its competitors [5][6] - TSMC's new 2nm chip technology entering production is expected to reduce power consumption by 25% to 30%, enhancing efficiency for data centers [6][7] - The company is well-positioned to capitalize on the ongoing AI arms race, with expectations of soaring sales through 2025 and 2026 [7] Group 3: Amazon - Amazon is currently lagging behind other big tech peers in performance, but it continues to show growth potential [6]

Core Viewpoint - Taiwan Semiconductor Manufacturing Company (TSMC) is identified as a leading investment opportunity in the AI sector due to its critical role in the AI computing industry and its strong financial performance [1][2][6]. Company Overview - TSMC is the world's largest chip foundry by revenue, serving as a neutral supplier for various clients, which mitigates concerns about reverse-engineering [4]. - The company has a diverse client base, including major tech firms like Nvidia, AMD, and Apple, indicating its integral role in high-tech devices [5][6]. Market Position - TSMC is positioned as a key player in the AI arms race, essential for computing equipment providers who rely on its chip manufacturing capabilities [3][6]. - The company is currently addressing significant challenges in AI, such as power consumption, by developing advanced chip technology [8][10]. Financial Performance - In the third quarter, TSMC reported a 41% year-over-year revenue increase in U.S. dollars, surpassing expectations [11]. - The company is projected to achieve a compound annual growth rate (CAGR) of 20% from now until 2030, leading to a total revenue growth of 148% [12]. Future Growth Potential - The global data center capital expenditure is expected to rise significantly, from $600 billion this year to $3 trillion to $4 trillion by 2030, indicating a robust market for TSMC's products [11]. - TSMC's new 2nm chip technology is anticipated to reduce power consumption by 25% to 30%, contributing to its growth and addressing energy concerns in the AI sector [10]. Valuation - TSMC is valued at 24 times its projected 2026 earnings, which is not excessively high compared to its tech peers, suggesting potential for stock growth if it maintains its margins [12][13].

Core Insights - Taiwan Semiconductor Manufacturing Company (TSMC) is expanding into 2nm nodes to meet the growing demand for efficient AI chips [1][3] - The company is investing in multiple phases to expand its 2nm fabrication facilities in Hsinchu, Kaohsiung, and Arizona [1][8] - Initial production costs for 2nm chips are high, leading to a temporary gross margin drop, estimated at around 2% and potentially expanding to 3-4% until production scales [2][4][8] Company Strategy - TSMC aims to achieve economies of scale and significant energy efficiency as it scales its 2nm production, which is expected to enhance its technology lead in the long run [3][4] - The company is relying on scale, automation, and government incentives to close the cost gap associated with initial production [4][8] Competitive Landscape - Competitors like Intel and GlobalFoundries are also expanding in AI chip manufacturing, with Intel focusing on its 18A process for 1.8nm chips [5] - GlobalFoundries is targeting mature nodes but is seeing some demand in AI-related applications, particularly in edge computing [6] Financial Performance - TSMC's shares have increased approximately 54.5% year-to-date, outperforming the Zacks Computer and Technology sector's gain of 30.9% [7] - The company trades at a forward price-to-earnings ratio of 25.57, which is lower than the sector average of 30.75 [9] - The Zacks Consensus Estimate indicates a year-over-year earnings increase of 44.9% for 2025 and 20.4% for 2026, with upward revisions in estimates over the past 30 days [10]

Core Viewpoint - The article discusses the potential for Taiwan Semiconductor Manufacturing Company (TSMC) to join the exclusive $3 trillion valuation club by 2029, currently occupied by Nvidia, Apple, Microsoft, and Alphabet, given its current valuation of $1.5 trillion [1][2]. Group 1: Company Positioning - TSMC is the world's leading contract chip manufacturer and plays a critical role in the AI supply chain, supplying chips to major companies like Nvidia, AMD, and Broadcom [4]. - The company is expanding its global footprint to mitigate risks associated with its location near mainland China, with a significant $165 billion investment in the U.S. to build several chip fabrication sites [6]. Group 2: Technological Advancements - TSMC is addressing the energy crisis associated with AI data centers by launching 2nm chips, which are expected to consume 25% to 30% less power than the previous 3nm generation when running at the same speed [7]. - The introduction of these 2nm chips is anticipated to support the growth of AI hyperscalers, despite the higher costs associated with the new technology [9].

Core Insights - AI investing is becoming more challenging as competition increases, particularly with recent client wins by Advanced Micro Devices and Broadcom, although Nvidia remains a dominant player [1] - Taiwan Semiconductor Manufacturing (TSMC) is positioned as a neutral investment option that supports all three companies (Nvidia, AMD, Broadcom) by fabricating chips for them, making it a potential long-term winner in the AI sector [2] Company Positioning - TSMC holds the largest market share in the high-end chip market, benefiting from consistent technological advancements and high production yields, while maintaining a neutral stance by not marketing its own chips [4] - TSMC is addressing the power consumption challenges associated with AI data centers by developing more efficient chips, with the next generation of 2nm chips expected to be available in 2026 [5] Efficiency Gains - The new 2nm chips are projected to consume 25% to 30% less power when running at the same speed, representing significant efficiency improvements [6] - TSMC has reported substantial revenue growth in Q3 and anticipates continued growth in Q4, reinforcing its integral role in the AI arms race [7]