Semiconductor stocks have been on a tear lately, driven by booming artificial intelligence (AI) demand and data-center spending. In 2025 alone, Nvidia (NVDA) jumped about 30% and Intel (INTC) stock rose more than 80%. Specialized chip suppliers also saw eye-popping gains. Among the clear leaders has been Taiwan Semiconductor Manufacturing Company (TSM), the world’s largest contract chipmaker. The company is benefiting directly from accelerating AI adoption by key customers such as Nvidia and Apple (AAPL).
That sector-wide strength has flowed through the supply chain, boosting orders and revenues at leading foundries such as TSMC. Last week, Taiwan Semiconductor reported a robust 20% year-over-year (YOY) jump in fourth-quarter revenue, beating market expectations and reinforcing its growth narrative.
As momentum carries into 2026, investors are increasingly asking whether TSM stock still has room to run.
Founded in 1987, Taiwan Semiconductor pioneered the pure-play foundry model and is now the world’s largest contract chipmaker. It produces advanced logic chips for customers such as Nvidia, Apple, and AMD (AMD) using leading-edge nodes like 3 nanometer (nm) and 5 nanometer, placing it at the center of the global AI and data-center supply chain.
That position is being reinforced by heavy investment. TSMC is reportedly planning NT$450 billion to NT$500 billion in Taiwan capex for 2026, including new fabs and advanced packaging sites to ease tight supply at 3nm and future nodes. The company has also started work on its first 1.4nm fab, targeted for production in 2028, while raising its 2025 capex guidance to $40 billion to $42 billion.
Demand trends remain supportive. Apple and AMD are said to be expanding wafer orders into 2025 and 2026, helping drive strong stock performance. Over the past year, shares have climbed 65%, far outpacing the S&P 500 ($SPX).
TSMC is not a bargain, however. Its current forward price-to-earnings (P/E) ratio is at 26 times and the EV/EBITDA multiple is around 16 times. These multiples are high by broad industry standards, reflecting TSMC’s premium positioning and growth prospects. For context, many semiconductor peers trade in the mid-teens on a forward P/E basis. In other words, TSM stockk’s valuation is roughly in line with, or slightly above, the sector median. That said, the stock looks fairly valued given its dominant market share and growth runway, rather than deeply cheap.
finance.yahoo.com
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