05. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Return on Common Equity (TTM): 31.94%
YTD Share Price Gain as of June 23: 6.50%
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is quietly doing the heavy lifting behind the global AI revolution, and its latest quarterly results underscore just how vital this company is to the future of computing. With Q1 2025 earnings per share of $2.12, well above expectations of $2.03, TSMC is proving it's not just keeping pace, but helping define the next wave of AI innovation.
AI is no longer a niche segment for TSMC, it’s becoming the core growth engine. Despite headwinds like smartphone seasonality and the impact of a major earthquake, AI related demand helped cushion the quarter, and that momentum is only accelerating. Revenue from AI accelerators, such as AI GPUs, ASICs, and HBM controllers, is on track to double in 2025. This reflects growing adoption of AI across data centers, cloud platforms, and enterprise applications.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is responding aggressively to this demand. The company is doubling its CoWoS (chip on wafer on substrate) capacity this year to meet AI customers' needs. It’s also investing heavily for the future, with a $38–$42 billion capital budget in 2025, 70% of which is allocated toward advanced process technologies, crucial for building the high performance chips that power large AI models like ChatGPT, DeepSeek, and more.
Their 3nm and 5nm nodes, which are optimized for AI workloads, already make up over half of TSMC’s wafer revenue, and the company expects this mix to grow. In fact, TSMC projects a compound annual growth rate (CAGR) of mid 40% for AI chip revenue over the next five years, an astonishing outlook that speaks volumes about demand strength.
And the Arizona expansion? It’s more than just strategic, it’s foundational. With a total $165 billion investment plan in U.S. fabs, TSMC is creating a resilient, geographically diversified AI supply chain. Once complete, nearly 30% of its cutting edge capacity will be U.S. based, giving customers like NVIDIA, AMD, and Apple greater flexibility and security.
Bottom line: Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) isn’t just participating in the AI era, it’s enabling it. With world class manufacturing, unmatched scale, and massive investments in future capacity, TSMC stands out as one of the most essential and promising AI stocks to own now.