Taiwan Semiconductor Manufacturing Company Limited TSM

$TSM...WOW,fantastic earnings&guidance

Nvidia and Micron Can't Make AI Chips Without This Growth Stock. Here's Why It Could Soar.
This company might be considered the AI gatekeeper.
By Dave Kovaleski – Oct 2, 2026 at 7:00AM EST
+
Fool.com
on

Share
Summarize with AI
KEY POINTS

Neither Nvidia or Micron could generate the type of revenue they have without Taiwan Semiconductor.
Taiwan Semiconductor makes chips and components for these and other semicondictor companies.
TSMC stock is trading at a cheap valuation and has plenty of room to run.
Motley Fool Issues Rare "Total Conviction" Buy Alert ›
Nvidia (
NVDA
+1.52%
) and Micron (
MU
-1.86%
) are synonymous with the artificial intelligence (AI) boom.

Both are chip stocks, both have posted enormous returns, and both are reliant on another AI chipmaker, Taiwan Semiconductor Manufacturing (
TSM
+2.77%
).

In many ways, Taiwan Semiconductor, or TSMC, is the gatekeeper of the AI boom, because without it, the breakneck growth of Nvidia, Micron, and other AI-related companies would not be possible.

A person, smiling, standing at the train station.
Image source: Getty Images.

Taiwan Semiconductor, the AI gatekeeper

TSMC does pretty much one thing: It makes chips and semiconductor components for other companies, like Nvidia and Micron. That's why it is called a foundry -- a term that refers to a factory where things are manufactured.

freestar

As a semiconductor foundry, it is dominant, making about 70% of all chips and roughly 90% of more advanced AI semiconductor chips. Its major customers include Nvidia, as well as other tech stock giants like Apple, Broadcom, Advanced Micro Devices, and Amazon, to name a few.

TSMC makes millions of advanced chips every year and will generate some $33 billion from its largest customer, Nvidia, in 2026.

freestar

Expand
Taiwan Semiconductor Manufacturing Stock Quote
NYSE: TSM
Taiwan Semiconductor Manufacturing
PREMIUM FEATURE
Moneyball Superscore

97
/100
Today's Change
(2.77%) $12.73
Current Price
$471.93

Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.
Nvidia could not produce that many advanced chips that quickly without TSMC. Its technologies and processes set it apart from competitors, and it stands alone in its ability to make the most advanced chips at such scale, speed, and cost. This is why Taiwan Semiconductor is so indispensable to Nvidia.

Micron is part of the TSMC architecture

TSMC does not play the same role for Micron, but it is just as valuable to the memory chipmaker. While TSMC doesn't make memory chips for Micron, it makes the components that are required for Micron's advanced, next-generation high bandwidth memory (HBM) chips, which are used for AI applications.

As with Nvidia, TSMC's advanced technologies and processes are needed for these faster, more advanced HBM chips, and Micron could not make them as quickly or at such a scale without TSMC.

In addition, Micron partners with TSMC to package the next-generation HBM chips using TSMC's CoWoS (chip-on-wafer-on-substrate) technology. Nvidia and other chip companies use TSMC packaging for their AI processors, which includes essential foundational wafers, or base dies, provided by TSMC to make the stack function. Micron signed an agreement with TSMC to produce the base die for these stacks, enabling them to adopt this architecture alongside Nvidia and others.

So, without its connections to TSMC, it would not have access to the advanced components for its next-generation memory chips nor to TSMC's AI architecture stacks.

Why TSMC stock is a screaming buy

These advantages have resulted in huge earnings for TSMC. In the most recent quarter, TSMC revenue increased by 34% while earnings per share rose by 77% year over year. Advanced chips accounted for 77% of the revenue.

In the third quarter, the company expects revenue to jump to about $45 billion, up 12% from the second quarter. The gross profit margin target is 66% at the midpoint of the company's forecast, down from 67.7% in Q2. The company anticipates operating margin of 57% at the midpoint, down from 60.3% last quarter.

Taiwan Semiconductor stock is already up 50% year to date and 67% during the past 12 months.

Wall Street analysts are overwhelmingly bullish, with 95% of the analysts that cover the stock rating it as a buy. There is an average price target of $535 per share on TSMC stock, which would indicate 17% upside.

What makes TSMC a screaming buy right now, in addition to its competitive advantages and essential role as an AI gatekeeper, is its valuation. Trading at a forward price-to-earnings (P/E) ratio of 21 with a five-year PEG (price-to-earnings growth) ratio of 0.86 -- a PEG ratio of less than 1 means it's undervalued relative to its long-term earnings -- TSMC stock is too cheap to pass up right now. Given its growth prospects, market dominance, and low valuation, don't be surprised to see TSMC stock continue to move higher.

Bank of America Corp DE Buys 430,014 Shares of Protara Therapeutics, Inc. $TARA
Defense World StaffAug 29th, 2026
Protara Therapeutics logoBank of America Corp DE grew its stake in shares of Protara Therapeutics, Inc. (NASDAQ:TARA – Free Report) by 86.7% during the first quarter, according to the company in its most recent disclosure with the Securities and Exchange Commission. The fund owned 925,918 shares of the company’s stock after buying an additional 430,014 shares during the period. Bank of America Corp DE owned approximately 1.65% of Protara Therapeutics worth $4,824,000 as of its most recent filing with the Securities and Exchange Commission.

$TSM
Revenue: 1.27 trillion new Taiwan dollars ($39.45 billion ) vs. NT$1.264 trillion expected
Net income: NT$706.56 billion vs. NT$632.64 billion expected

$TSM

Metric Q1 2026 (actual) Q2 2026 (revenue actual, rest = consensus)
Revenue (NT$) 1,134.10 billion 1.27 trillion (record)
Revenue (USD) $35.90 billion ~$39.62 billion
Revenue YoY growth +35.1% +36%
Net income (NT$) 572.48 billion ~632.6 billion (consensus, unconfirmed)
EPS (per ADR) $3.49 ~$3.81 (consensus, unconfirmed)
Gross margin 66.2% 65.5–67.5% (guidance band)
Operating margin 58.1% 56.5–58.5% (guidance band)
Net profit margin 50.5% Not yet reported

Notes:

•	Q2 revenue beat TSMC’s own guidance range of [$39.0B](/symbol/39.0b)–$40.2B and set an all-time record.
•	CoWoS (AI chip advanced packaging) is reportedly sold out through year-end.
•	Net income, actual margins, and updated full-year 2026 guidance come out on the earnings call later today (2pm Taiwan time / 2am ET). Want me to pull the final numbers once they’re released?

$TSM Investing.com-- Taiwan Semiconductor Manufacturing Corp, or TSMC (NYSE:TSM), clocked a record-high second-quarter profit on Thursday, as the world’s biggest contract chipmaker continued to benefit from outsized AI-driven demand.

7/16 next time

Just had earnings

Time for TSM to run

The market is over bought even with earnings do yourself a favor and sell some stocks you will not regret it