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Will AI-Driven Chip Demand Help TSM Meet 2026 Revenue Growth Goal?
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Key Takeaways
Taiwan Semiconductor posted 35.9% revenue growth in 2025, fueled by AI chip demand.
TSM benefits from strong orders for 3nm and 5nm chips used in AI and computing systems.
TSMC is expanding fabs globally, including a $165B investment in Arizona facilities.
Taiwan Semiconductor Manufacturing Company (TSM - Free Report) , also known as TSMC, continues to lead the global chip foundry market. Its scale and technology make it the first choice for companies driving the artificial intelligence (AI) boom. NVIDIA, Advanced Micro Devices and Broadcom all count on TSMC to build advanced graphics processing units (GPUs) and AI accelerators, which have led to record profits and a significant increase in revenues.
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 Competitors in the AI Chip Making Race
Intel (INTC - Free Report) and GlobalFoundries (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. 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 91.2% over the past year compared with the Zacks Computer and Technology sector’s gain of 33.6%.
From a valuation standpoint, TSM trades at a forward price-to-earnings ratio of 22.53, lower than the sector’s average of 24.18.
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 34.9% and 22.9%, respectively. Estimates for 2026 have been revised downward over the past seven days, while those for 2027 have been raised over the past 30 days.
View the Zacks #1 Rank List
Image: Bigstock
Will AI-Driven Chip Demand Help TSM Meet 2026 Revenue Growth Goal?
Key Takeaways
Taiwan Semiconductor Manufacturing Company (TSM - Free Report) , also known as TSMC, continues to lead the global chip foundry market. Its scale and technology make it the first choice for companies driving the artificial intelligence (AI) boom. NVIDIA, Advanced Micro Devices and Broadcom all count on TSMC to build advanced graphics processing units (GPUs) and AI accelerators, which have led to record profits and a significant increase in revenues.
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 Competitors in the AI Chip Making Race
Intel (INTC - Free Report) and GlobalFoundries (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. 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 91.2% over the past year compared with the Zacks Computer and Technology sector’s gain of 33.6%.
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 22.53, lower than the sector’s average of 24.18.
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 34.9% and 22.9%, respectively. Estimates for 2026 have been revised downward over the past seven days, while those for 2027 have been raised over the past 30 days.
Image Source: Zacks Investment Research
Taiwan Semiconductor currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.