3 Reasons to Buy TSMC Stock Like There's No Tomorrow

• Sales are increasing fast, and absorption is guiding for a CAGR of 25% implicit the adjacent fewer years.

• The institution is highly profitable.

• TSMC is expanding capex walk to conscionable expanding demand.

• 10 stocks we similar amended than Taiwan Semiconductor Manufacturing ›

Will 2026 beryllium different unthinkable twelvemonth for artificial quality (AI)? So far, signals are each saying yes. The hyperscalers are readying to walk adjacent much wealth than they did past twelvemonth to physique retired their platforms, to the tune of hundreds of millions of dollars. And portion determination whitethorn beryllium 1 victor crowned from each the builders, there's (at least) 1 institution that benefits from each of them: Taiwan Semiconductor Manufacturing (NYSE: TSM).

Here are 3 reasons to bargain TSMC banal close now.

TSMC reported 2025 fourth-quarter net past week, and it demonstrated continued strength. Here's however income person accrued twelvemonth implicit twelvemonth successful the past 4 quarters:

Data source: Taiwan Semiconductor quarterly reports. YoY = twelvemonth implicit year.

2025 income for the afloat twelvemonth accrued 36%, and absorption is guiding for income to emergence different 30% successful 2026. It's aiming for a compound yearly maturation complaint of 25% done 2029, which is superior growth, particularly for a institution that's already arsenic ample arsenic TSMC. It had $122 cardinal successful 2025 revenue.

TSMC is simply a capital-intensive business, since it plows wealth into its foundry plants that manufacture carnal semiconductors. Despite that, it's incredibly profitable, with precocious income measurement and a disciplined outgo structure.

In the 4th quarter, gross borderline expanded from 59% successful 2024 to 62.3% successful 2025, and operating borderline expanded from 49% to 54%. Management is guiding for gross borderline to scope 63% to 64% successful the 2026 archetypal 4th and to enactment supra 56% agelong term, and for operating borderline to beryllium betwixt 54% and 56% successful the archetypal quarter.

The institution is simply a batch much than AI, though that's an integral constituent of its exemplary these days. High-performance computing (HPC), the conception that includes the AI business, accounted for 58% of gross successful 2025; its maturation complaint accrued 48% twelvemonth implicit year.

Capital expenditures (capex) were $41 cardinal successful 2025, up from $30 cardinal successful 2024, and absorption updated investors that expanding capex has ever been correlated with precocious opportunities; it's investing successful imaginable and the quality to conscionable precocious demand. To that end, it's raising capex walk to astir $54 cardinal successful 2026, with astir 70% to 80% going to what it calls "advanced process technologies." In this case, the marketplace is excited astir higher capex spend, due to the fact that it implies higher maturation connected the way.