If I Could Load Up on Any Artificial Intelligence (AI) Stock, It Would Be This One (Hint: It’s Not Nvidia)
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Taiwan Semiconductor Manufacturing Company (TSMC) produces the vast majority of all high-performance AI chips.
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High-performance chips (which include AI chips) accounted for 59% of TSMC’s total revenue in the first quarter of 2025.
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TSMC has been expanding its manufacturing operations to different countries outside of Taiwan.
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Artificial intelligence (AI) has been around for a while, but it gained mainstream popularity in early 2023 due to the rise of generative AI tools like OpenAI’s ChatGPT and Alphabet’s Google Gemini.
Plenty of tech stocks have seen their valuations skyrocket because of the AI boom, but the biggest beneficiary has undoubtedly been Nvidia (NASDAQ: NVDA). Over the past three years, its stock has increased by nearly 920%, while the S&P 500 has risen around 64% over the same period.
Nvidia has gotten a lot of attention, and rightfully so. Its graphics processing units (GPUs) and AI software are very important to the AI ecosystem. However, there’s another company that Nvidia relies on heavily that’s just as important, and it’s a stock I’m loading up on: Taiwan Semiconductor Manufacturing Company (NYSE: TSM) (TSMC).
At first glance, calling a manufacturing company like TSMC an AI stock might seem unusual, but it’s a pivotal player in how the technology all comes together. Let’s take a look at how its business works.
TSMC is the world’s largest semiconductor (chip) manufacturer and the pioneer of the foundry business model. You can’t buy TSMC chips in a store or online like a smartphone or laptop. Instead, companies go to TSMC with their chip designs, and it manufactures them, bringing those designs to life.
For example, it makes chips for Apple‘s iPhones, Tesla‘s self-driving technology, AMD‘s processors, Nvidia’s GPUs, and plenty of other applications. TSMC’s relationship with Nvidia and other AI-chip designers is why I’m willing to consider it an “AI stock,” even as a chip manufacturing company.
In fact, TSMC manufactures the vast majority of all high-performance AI chips, so there’s a strong case to be made that without the company and its capabilities, the AI landscape would look significantly different — for the worse.
The increased demand for AI chips is showing up in TSMC’s financials. In the first quarter, its revenue increased 35% year over year to $25.5 billion. It expects its Q2 revenue to come in between $28.4 billion and $29.2 billion, representing year-over-year growth of 36% to 40%. That’s impressive for a company of TSMC’s size.
