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AI-Driven Demand Fuels TSM's Growth: Will It Meet 2026 Revenue Target?
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Key Takeaways
TSM's 2025 revenues rose 35.9% to $122.42B as EPS climbed 51.3% to $10.65.
TSM's growth was driven by higher 3nm and 5nm chip orders for AI servers and high-performance computing.
TSM is expanding fabs globally to meet AI demand and target 2026 growth.
Taiwan Semiconductor Manufacturing Company (TSM - Free Report) , also known as TSMC, continues to benefit from the global surge in demand for artificial intelligence (AI) chips. In 2025, the company’s revenues jumped 35.9% year over year to $122.42 billion, while earnings per share (EPS) soared 51.3% to $10.65.
The robust growth was primarily driven by increased orders for 3nm and 5nm chips, which are used in AI servers and high-performance computing applications. Taiwan Semiconductor expects the trend to continue and forecasts approximately 30% revenue growth in 2026.
AI-related chips used in data centers, cloud platforms and advanced computing systems require cutting-edge manufacturing. With Taiwan Semiconductor’s advanced fabrication facilities, the company is well-positioned to benefit from the rising demand for AI and advanced computing chips.
To meet the growing demand for AI and advanced computing chips, TSMC is expanding its fabrication facilities across different countries. In the United States alone, Taiwan Semiconductor is investing $165 billion to build five new state-of-the-art fabrication facilities and two advanced packaging facilities in Arizona. These facilities will boost the U.S. semiconductor supply chain for chips used in AI and high-performance computing. Apart from this, it is expanding fabrication facilities across Germany, Japan and Taiwan.
This global expansion reflects Taiwan Semiconductor’s response to customer demand for geographic flexibility and government incentives. By locating capacity closer to key clients and end markets, the company strengthens its role as a critical supplier in the semiconductor supply chain. We believe that TSMC’s global fab expansion push will help it capitalize on the growing opportunities from rising AI-related chip demand and meet its 2026 revenue growth target.
TSMC’s Rivals in the AI Chip Making Race
Intel Corporation (INTC - Free Report) and GlobalFoundries Inc. (GFS - Free Report) are also expanding their presence in AI chip manufacturing.
Intel is investing heavily in its foundry business, aiming to produce advanced chips. The company is currently focusing on its 18A process, which signifies 1.8nm chips. Intel’s 18A process is claimed to have higher performance and efficiency, which will help the company better compete with Taiwan Semiconductor’s upcoming N2 chips.
GlobalFoundries focuses more on mature nodes. However, the company is witnessing some AI-related demand, especially in edge computing and embedded AI. GlobalFoundries is working to expand capacity in the United States and Europe to attract customers looking for supply-chain flexibility.
TSM’s Share Price Performance, Valuation and Estimates
Shares of Taiwan Semiconductor have surged around 56.5% over the past year compared with the Zacks Computer and Technology sector’s gain of 24.7%.
From a valuation standpoint, TSM trades at a forward price-to-earnings ratio of 26.29, lower than the sector’s average of 27.42.
Taiwan Semiconductor Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Taiwan Semiconductor’s 2026 and 2027 earnings implies a year-over-year increase of 20.8% and 23.3%, respectively. Estimates for 2026 and 2027 have been revised downward in the past seven days.
Image: Bigstock
AI-Driven Demand Fuels TSM's Growth: Will It Meet 2026 Revenue Target?
Key Takeaways
Taiwan Semiconductor Manufacturing Company (TSM - Free Report) , also known as TSMC, continues to benefit from the global surge in demand for artificial intelligence (AI) chips. In 2025, the company’s revenues jumped 35.9% year over year to $122.42 billion, while earnings per share (EPS) soared 51.3% to $10.65.
The robust growth was primarily driven by increased orders for 3nm and 5nm chips, which are used in AI servers and high-performance computing applications. Taiwan Semiconductor expects the trend to continue and forecasts approximately 30% revenue growth in 2026.
AI-related chips used in data centers, cloud platforms and advanced computing systems require cutting-edge manufacturing. With Taiwan Semiconductor’s advanced fabrication facilities, the company is well-positioned to benefit from the rising demand for AI and advanced computing chips.
To meet the growing demand for AI and advanced computing chips, TSMC is expanding its fabrication facilities across different countries. In the United States alone, Taiwan Semiconductor is investing $165 billion to build five new state-of-the-art fabrication facilities and two advanced packaging facilities in Arizona. These facilities will boost the U.S. semiconductor supply chain for chips used in AI and high-performance computing. Apart from this, it is expanding fabrication facilities across Germany, Japan and Taiwan.
This global expansion reflects Taiwan Semiconductor’s response to customer demand for geographic flexibility and government incentives. By locating capacity closer to key clients and end markets, the company strengthens its role as a critical supplier in the semiconductor supply chain. We believe that TSMC’s global fab expansion push will help it capitalize on the growing opportunities from rising AI-related chip demand and meet its 2026 revenue growth target.
TSMC’s Rivals in the AI Chip Making Race
Intel Corporation (INTC - Free Report) and GlobalFoundries Inc. (GFS - Free Report) are also expanding their presence in AI chip manufacturing.
Intel is investing heavily in its foundry business, aiming to produce advanced chips. The company is currently focusing on its 18A process, which signifies 1.8nm chips. Intel’s 18A process is claimed to have higher performance and efficiency, which will help the company better compete with Taiwan Semiconductor’s upcoming N2 chips.
GlobalFoundries focuses more on mature nodes. However, the company is witnessing some AI-related demand, especially in edge computing and embedded AI. GlobalFoundries is working to expand capacity in the United States and Europe to attract customers looking for supply-chain flexibility.
TSM’s Share Price Performance, Valuation and Estimates
Shares of Taiwan Semiconductor have surged around 56.5% over the past year compared with the Zacks Computer and Technology sector’s gain of 24.7%.
Taiwan Semiconductor One-Year Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, TSM trades at a forward price-to-earnings ratio of 26.29, lower than the sector’s average of 27.42.
Taiwan Semiconductor Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Taiwan Semiconductor’s 2026 and 2027 earnings implies a year-over-year increase of 20.8% and 23.3%, respectively. Estimates for 2026 and 2027 have been revised downward in the past seven days.
Image Source: Zacks Investment Research
Taiwan Semiconductor currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.