Taiwan Semiconductor Hits Record High as AI Chip Demand Surges

Taiwan Semiconductor Manufacturing (TSM) shares climbed to an all-time high this week after reporting robust August revenue.

The world’s largest contract chipmaker posted sales of NT$335.8 billion ($11.1 billion), up nearly 34% from a year ago and almost 4% from July. From January through August, revenue has already topped NT$2.43 trillion ($77.5 billion), marking a 37% jump from the same period in 2024.

This surge reflects the ongoing boom in artificial intelligence infrastructure. TSM produces the advanced chips that power Nvidia’s (NVDA) GPUs, Apple’s (AAPL) iPhones, and custom silicon from cloud giants. That central role has investors treating Taiwan Semi as more than just a supplier—it has become a linchpin in the global AI buildout.

 
The Backbone of the AI Supply Chain
While Nvidia’s near tenfold rise since late 2022 has grabbed headlines, much of that success wouldn’t be possible without TSM. The company controls around 68% of global foundry revenue, far ahead of Samsung at 8%. In practical terms, nearly every advanced chip—from AI accelerators to smartphone processors—runs through TSM’s factories.

Even as cloud providers design their own specialized chips, they still rely on TSM to bring those designs to life. This leaves Taiwan Semi in a unique position: it benefits no matter which chip designer gains market share. Whether Nvidia maintains its lead or Amazon, Microsoft (MSFT), and Google (GOOG) ramp up their in-house chips, TSM remains the essential manufacturing partner.

Valuation and Investor Outlook
Year-to-date, TSM stock is up more than 27%, far outpacing the S&P 500’s 11% gain. Analysts expect continued strength, with Wall Street targets clustering around $212.80 and recent forecasts from Needham and Susquehanna averaging $268.33. Shares recently traded at $260.44 after touching an intraday record of $264.58.

Importantly, TSM has not seen the same valuation stretch as Nvidia. While Nvidia trades at nearly 40 times forward earnings, Taiwan Semi’s multiple is far more modest relative to its growth profile. For long-term investors, that leaves more room for upside as AI infrastructure spending accelerates.

Conclusion
Taiwan Semiconductor’s latest revenue surge reinforces its status as the backbone of the AI era. By serving as the neutral foundry behind Nvidia, AMD (AMD), Apple, and the hyperscalers, TSMC stands to benefit from AI adoption regardless of which chip designers dominate. With sales growth accelerating, shares at record highs, and a valuation still reasonable compared with peers, TSM remains one of the most compelling ways to invest in the semiconductor and AI buildout.

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