The Overlooked Infrastructure Play Quietly Winning the AI Boom
Taiwan Semiconductor Manufacturing (TSM) has underperformed the semiconductor sector in 2026, but its latest results indicate it is winning big from the massive spending on AI data centers. The company's growth rate is picking up thanks to AI infrastructure spending, and …
Intelligence analysis by Llama
TSMC's growth rate is picking up thanks to AI infrastructure spending, and its earnings per share jumped by 77% from the year-ago period to $4.31. The company's revenue increased 34% year over year to $40.2 billion, and its guidance was the icing on the cake.
Imagine you have a super powerful computer that can do lots of things at the same time. That's what TSMC's chips do for artificial intelligence (AI) computers. They help make AI computers faster and more powerful, which is why TSMC's stock is growing so much.
Analysis
A $60B Vote of Confidence
TSMC's growth rate is picking up thanks to AI infrastructure spending, and its earnings per share jumped by 77% from the year-ago period to $4.31. The company's revenue increased 34% year over year to $40.2 billion, and its guidance was the icing on the cake. TSMC anticipates Q3 revenue of $45.2 billion, which points to a 37% jump from the year-ago period. Even better, the company sees its operating margin increase to 57% in the current quarter, up from 50.6% in the year-ago quarter.
Why Cursor?
TSMC's incredible growth will continue in the long run, given that it is the go-to manufacturer for chips for the leading AI chip designers, including Nvidia, AMD, Qualcomm, Broadcom, and others. The company's growth is driven by the massive spending on AI data centers, and its earnings per share are expected to reach $28.03 in 2028. If TSMC's stock price reaches $700 at that time, it would be a potential gain of 67% in less than three years.
The Road Ahead
TSMC's growth rate is expected to continue in the long run, driven by the secular growth of the AI infrastructure space. The company's stock can go on a terrific bull run, and investors can buy TSMC at 25 times forward earnings right now. If TSMC's earnings per share indeed reach $28.03 in 2028 and it trades at 25 times earnings at that time, its stock price could jump to $700.
Key points
- TSMC's revenue increased 34% year over year to $40.2 billion.
- TSMC's earnings per share jumped by 77% from the year-ago period to $4.31.
- TSMC anticipates Q3 revenue of $45.2 billion, which points to a 37% jump from the year-ago period.
- TSMC sees its operating margin increase to 57% in the current quarter, up from 50.6% in the year-ago quarter.
TSMC's growth rate is expected to continue in the long run, driven by the secular growth of the AI infrastructure space. The company's stock can go on a terrific bull run, and investors can buy TSMC at 25 times forward earnings right now.
TSMC's growth rate may slow down if the AI infrastructure spending decreases, which could lead to a decline in the company's earnings per share.
