19 hours ago
2
Keithen Drury, The Motley Fool
Sun, July 19, 2026 astatine 1:30 PM CDT 3 min read
Taiwan Semiconductor Manufacturing (NYSE: TSM) whitethorn beryllium 1 of the astir important companies to the wellness of the AI infrastructure build-out. Its foundries churn retired the logic chips designed by astir each 1 of the large players successful the space, and it conscionable made an announcement that supports the thought that we're inactive successful the aboriginal innings of the AI build-out. During its second-quarter net call, it announced it would marque an further $100 cardinal concern successful expanding its chipmaking facilities successful Arizona. If Taiwan Semiconductor suspected that the AI build-out was nearing completion, it wouldn't beryllium expanding its accumulation capacity.
Given its starring presumption successful a still-growing space, I deliberation Taiwan Semiconductor is 1 of the lowest-risk, highest-potential-reward options successful the market, and it inactive looks similar a phenomenal concern now, adjacent aft rising implicit 30% truthful acold this year.
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AI computing powerfulness starts with Taiwan Semiconductor
Taiwan Semiconductor is the world's starring third-party spot foundry, which means it takes spot designs from its clients and manufactures them connected their behalf. Its customers see tech giants Nvidia, AMD, Apple, Broadcom, and Tesla. This puts TSMC successful a beardown position, arsenic it often manufactures chips for rivals specified arsenic Nvidia and AMD, allowing it to nett careless of which of those customers is winning successful the marketplace. Taiwan Semiconductor accounts for astir three-quarters of each semiconductor manufacture gross successful the world, according to probe by The Motley Fool. During the quarter, 66% of its gross came from high-performance computing, showcasing that AI is eating up a batch of Taiwan Semiconductor's accumulation capacity, and explaining its program to grow its Arizona foundries.
Taiwan Semiconductor is 1 of the apical ways to put successful the AI arms race, and it's honestly not arsenic costly arsenic you mightiness guess, considering its coagulated maturation rate. (Revenue grew by 34% successful U.S. dollars during Q2.) At 24 times guardant earnings, Taiwan Semiconductor trades astatine lone a tiny premium to the S&P 500 (SNPINDEX: ^GSPC), which averages 21.7 times guardant earnings.
Few companies person arsenic overmuch guaranteed occurrence arsenic Taiwan Semiconductor does arsenic agelong arsenic spending connected AI computing powerfulness remains robust. All signs constituent to that presumption remaining close implicit the adjacent fewer years, which gives maine assurance that Taiwan Semiconductor volition beryllium a market-crushing banal implicit that period, making it a no-brainer bargain today.
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