Semiconductor stocks have been soaring recently, driven by the high demand for artificial intelligence (AI) and data center spending. In 2025, Nvidia and Intel stocks both saw significant gains, with Nvidia jumping about 30% and Intel rising more than 80%. Specialized chip suppliers like Taiwan Semiconductor Manufacturing Company (TSM) have also experienced impressive growth, benefiting directly from the increasing adoption of AI by key customers such as Nvidia and Apple.
The strength in the semiconductor sector has led to a boost in orders and revenues at leading foundries like TSMC. In the fourth quarter of 2025, Taiwan Semiconductor reported a robust 20% year-over-year jump in revenue, surpassing market expectations and reinforcing its growth story.
As we head into 2026, investors are wondering if TSM stock still has room to run. Founded in 1987, Taiwan Semiconductor is the world’s largest contract chipmaker, known for pioneering the pure-play foundry model. The company produces advanced logic chips for major customers like Nvidia, Apple, and AMD using cutting-edge nodes like 3 nanometer and 5 nanometer, positioning itself at the heart of the global AI and data center supply chain.
TSMC’s position in the market is further strengthened by significant investments. The company is reportedly planning substantial capex for 2026, including new fabs and advanced packaging sites to address supply constraints at 3nm and future nodes. Additionally, TSMC has begun work on its first 1.4nm fab, set for production in 2028, while raising its 2025 capex guidance.
Demand for TSMC’s chips remains strong, with customers like Apple and AMD expanding wafer orders into 2025 and 2026. Despite the impressive performance, TSMC’s stock is not considered a bargain, with a forward P/E ratio of 26 times and an EV/EBITDA multiple of around 16 times. These multiples are higher than industry standards, reflecting TSMC’s premium positioning and growth potential.
Looking ahead, Wall Street analysts are bullish on TSM stock, with firms like Goldman Sachs, JPMorgan, and Morgan Stanley raising their price targets and revenue forecasts. The consensus among analysts is a “Strong Buy,” with a mean price target of $352.67, implying about 6% upside potential.
In conclusion, TSMC continues to be a dominant player in the semiconductor industry, with a strong market position, improving margins, and a long cycle of capex from AI. While the stock may not be cheap, its growth prospects and market leadership make it an attractive investment opportunity for the future.
