TSMC has been a focus of global stock markets in recent years, especially in 2025 when its stock price surged by over 50%. Entering 2026, is this Taiwanese semiconductor giant still worth buying? Analysts at The Motley Fool believe that TSMC (NYSE:TSM) has not only performed exceptionally well in the past, but its future prospects remain very optimistic. With the booming development of artificial intelligence, TSMC's potential will undoubtedly continue to attract investors' attention. Wall Street analysts predict that TSMC's revenue could grow by 21% this year. TSMC's potential in the semiconductor field is evident and will continue to attract significant investor attention. Especially with the $500 billion order from Nvidia, TSMC is expected to benefit, further driving its revenue growth. This is purely market observation and not investment advice.
TSMC's market opportunities
TSMC has consistently held a leading position in the global semiconductor foundry market and is projected to perform strongly in 2025. As the world's largest semiconductor foundry, TSMC's business spans multiple sectors, with the artificial intelligence (AI) market being its most prominent. Because TSMC manufactures chips for several major chip companies, including Nvidia, AMD, and Broadcom, it plays a crucial role in the AI field. The majority of AI chips designed by these companies originate from TSMC, allowing them to fully benefit from the rapid growth of this sector.
With the expanding applications of artificial intelligence, particularly the surging demand for data centers, TSMC's future growth potential is enormous. Wall Street analysts predict TSMC's revenue growth rate will reach 21% by 2026, a remarkable figure for a company with a market capitalization approaching US$1.6 trillion. While exchange rate fluctuations may affect the dollar-denominated growth rate, TSMC's market position and anticipated future growth remain very stable.
TSMC's valuation and price-to-earnings ratio are reasonable.
Comparing TSMC's stock price to other large technology companies reveals its relatively low valuation. TSMC's PE ratio is projected to remain around 24, indicating that its stock price is still relatively affordable compared to other major technology companies. While a high PE ratio doesn't necessarily mean a stock is cheap, it suggests that TSMC's stock price is not currently overvalued. Therefore, if you are looking for a company with solid growth potential, TSMC is undoubtedly a worthwhile option to consider.
TSMC's expected growth rate is significantly higher than the market average, compared to the S&P 500 index (which typically grows at around 10% annually). This makes TSMC a potentially popular investment choice in 2026.
TSMC holds a 72% market share in wafer manufacturing.
Artificial intelligence technology has entered all walks of life, from data centers to smartphones and electronic devices. All products rely on chips. TSMC’s advantage in the wafer manufacturing field is that it not only produces high-efficiency chips for artificial intelligence for companies such as Nvidia and AMD, but also has a market share of nearly 72% in the global wafer foundry market, far exceeding its competitor Samsung’s 7%.
TSMC has $500 billion in orders from Nvidia.
Another factor supporting TSMC's future growth is its close partnership with NVIDIA. NVIDIA and TSMC have a close collaboration in GPU manufacturing. NVIDIA's Rubin architecture, expected to launch in 2026, is a high-efficiency chip based on TSMC's advanced 3-nanometer process, designed to achieve higher computing power with lower power consumption. NVIDIA currently has a $500 billion order backlog, providing solid support for TSMC's future business growth.
This collaboration not only helps drive TSMC's revenue growth but also demonstrates TSMC's key role in the global high-tech industry. With increasing demand for artificial intelligence, TSMC's order volume and revenue are expected to rise further.
TSMC's growth potential
TSMC's stock still has significant upside potential. Even amidst the AI boom, TSMC's stock appears somewhat undervalued relative to its competitors. With a Price-to-Earnings Growth Ratio (PEG) close to 1, TSMC's stock is priced very attractively in the current market environment. Investors are typically willing to pay higher prices for quality stocks with PEG ratios between 2 and 2.5, and TSMC falls into this category.
Furthermore, as TSMC's dominance in the global chip market continues to strengthen, the company is expected to maintain high growth in the coming years. Analysts predict that TSMC will likely achieve stable revenue growth at an average annual rate of close to 29% over the next three to five years, providing investors with stable and predictable returns.
Is it still worthwhile to buy TSMC stock in 2026? This article first appeared on ABMedia .
