Key Points
-
TSMC's diversification of production to the U.S. reduces concentration risk.
-
AI chip demand is still growing.
-
10 stocks we like better than Taiwan Semiconductor Manufacturing ›
Taiwan Semiconductor Manufacturing (TSM +0.71%) made a major announcement as part of its second-quarter earnings report: It's increasing its investment in its Arizona production facilities by another $100 billion. That brings the total investment to $265 billion -- a major win for domestic chip production. But what does that mean for TSMC (as it is also known)?
The expansion showcases that there is still growing and unmet demand for chip production, making the stock a no-brainer buying opportunity.
Image source: The Motley Fool.
Chip demand is only going to get greater
There has been a bipartisan political push in the U.S. to increase domestic chip production. The CHIPS Act was passed during the Biden administration to provide financial incentives to move more production to the U.S. The Trump administration has encouraged firms that have moved production outside of U.S. borders to bring it back as well. TSMC is one of the chipmakers taking advantage of the incentives offered, and it may be doing so for reasons that are less tied to financial incentives.
A cause for concern about investing in TSMC right now is the complicated political environment in Taiwan. Taiwan's strained relationship with China has always been complex, and there are growing fears that China will try to bring the country under China's influence by force. Such a move would be very disruptive to the world's economy. TSMC is diversifying some of its production elsewhere, including to the U.S., to lessen the negative impact of a Chinese takeover in Taiwan. It doesn't fully resolve the issue, but it would likely help.
NYSE: TSM
Taiwan Semiconductor Manufacturing
Today's Change
(0.71%) $2.95
Current Price
$418.95
TSM
YTD1w1m3m6m1y5y
PriceVS S&P
Key Data Points
Market Cap
$2.2TMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.
Day's Range
$416.70 - $425.68
52wk Range
$225.63 - $479.00
Volume
8.9M
Avg Vol
13.5M
Gross Margin
63.08%
Dividend Yield
0.83%
But aside from the China situation, TSMC is well situated to benefit from what has become the largest tech boom in decades. The growth of artificial intelligence (AI) has created an unprecedented demand for computing chips. Given that TSMC is the world's largest chip foundry, it's well-positioned to benefit.
Because of its leadership position, TSMC has access to extensive information on potential demand for its clients' products, including future order plans. If TSMC decides it needs to invest another $100 billion in infrastructure, that's a pretty good indicator that there will be greater demand for chip production across the market in the future.
Where to invest $1,000 right now
When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 965% — a market-crushing outperformance compared to 212% for the S&P 500.
They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.
*Stock Advisor returns as of August 22, 2026.
During TSMC's Q2 conference call, CEO C.C. Wei noted that he believes there will be strong AI chip demand until 2029 or 2030. Still, there could be more even after that, because the emerging AI chip industry is different from anything they've ever seen.
With TSMC's chips going into nearly every computing device used in a data center, I think it's a no-brainer buy right now and a perfect stock to take advantage of during the AI buildout. As long as there is more AI spending, TSMC is primed to benefit. That's exactly what AI hyperscalers have indicated, making TSMC a top stock pick.
Should you buy stock in Taiwan Semiconductor Manufacturing right now?
Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the**10 best stocks**for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
**Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $429,223! ** Or when Nvidia **made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,318,055!
**Now, it’s worth noting_Stock Advisor_’s total average return is965% — a market-crushing outperformance compared to212%for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of August 22, 2026.
About the Author
Keithen Drury is a contributing Motley Fool technology analyst covering AI, semiconductors, cybersecurity, and SaaS stocks. In addition to The Motley Fool, Keithen is a mechanical engineer and has held roles at Honeywell and smaller industrial companies like Brand Hydraulics and Lincoln Industries. He holds a bachelor’s degree in mechanical engineering from Dordt University.
Stocks Mentioned
[
Taiwan Semiconductor Manufacturing
NYSE: TSM
$418.95
(+0.71%)+$2.95](https://www.fool.com/quote/nyse/tsm/)
