TLDR
- TSMC delivered 26% Q4 revenue growth and guides for 30% increase in 2026
- Five-year growth forecast shows 25% compound annual rate through 2029
- Stock trades at 24 times forward earnings compared to 30x for tech peers
- Company investing $165 billion in Arizona chip manufacturing facilities
- New US-Taiwan trade deal includes $250 billion semiconductor investment commitment
Taiwan Semiconductor Manufacturing released fourth-quarter earnings that beat expectations and provided guidance showing the AI chip boom continues at full speed. The world’s largest chip foundry sees no slowdown ahead.
Taiwan Semiconductor Manufacturing Company Limited, TSM
TSMC reported revenue jumped 26% in Q4 versus the same period last year. The company expects even stronger performance in 2026 with revenue projected to climb 30%.
Looking further out, management forecasts a 25% compound annual growth rate from 2024 through 2029. That growth pace is exceptional for any company, let alone one with a market value exceeding $1.7 trillion.
The company manufactures chips that power AI systems for nearly every major technology firm. TSMC supplies Nvidia, Apple, and other leaders with the advanced logic chips their products require. As AI hardware demand increases, TSMC captures a large share of that spending.
Market Undervalues Growth Potential
TSMC stock gained more than 50% in 2025, but the current price doesn’t reflect the company’s growth trajectory. The shares trade at 24 times forward earnings.
Compare that to most large technology companies, which trade around 30 times forward earnings. None of those businesses expect to grow revenue 30% this year.
The S&P 500 index trades at 22.3 times forward earnings. TSMC sits slightly above that benchmark but delivers growth rates the broader market can’t match.
The gap between TSMC’s valuation and its growth profile represents a buying opportunity. Investors get exposure to one of the fastest-growing large-cap companies at a reasonable price.
Arizona Expansion Strengthens US Presence
TSMC is investing $165 billion to build chip manufacturing facilities in Phoenix. The investment ranks among the largest foreign investments in US manufacturing.
Taiwan’s president met with Arizona Senator Ruben Gallego last week to discuss expanding semiconductor operations. The discussion focused on adding more production and research facilities in the Phoenix area.
That meeting came after Taiwan and the United States finalized a trade agreement. US tariffs on Taiwan exports dropped to 15% from 20%.
Under the deal, Taiwan committed to invest $250 billion in semiconductor, energy, and AI production on American soil. Taiwan also guaranteed $250 billion in credit for additional future investments.
Senator Gallego praised the investment level and noted other states envy Arizona’s position. He expressed interest in seeing continued growth.
President Trump has pushed major chipmakers to expand US operations, especially for chips used in artificial intelligence applications. TSMC’s Phoenix investment responds to that pressure while serving the company’s growth strategy.
The Arizona facilities will produce some of the most advanced chips available. Construction is underway on multiple plants that will employ thousands of workers.
Growth Outlook Remains Strong
TSMC’s position as the dominant chip foundry gives it unique exposure to AI growth. The company projects 30% revenue growth in 2026 while trading below typical technology stock valuations.
The five-year forecast showing 25% annual growth through 2029 reflects management’s confidence in sustained AI infrastructure spending. TSMC’s Phoenix expansion ensures the company can meet rising demand while strengthening ties with its largest market.
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