Is TSMC still worth investing in? By 2026, holding 500 billion in orders, with a 72% market share dominating the global market

TSMC’s stock price is projected to rise over 50% by 2025, with Wall Street forecasting a 21% revenue growth in 2026. Key catalysts include Nvidia’s $500 billion order and the company’s global foundry market share of 72%, far surpassing Samsung, with a reasonable P/E ratio of 24. Analysts at The Motley Fool remain optimistic about the future prospects.

The moat built by TSMC’s 72% market share

TSMC holds an absolute leadership position in the global semiconductor foundry market, demonstrating strong performance in 2025. As the world’s largest semiconductor foundry, TSMC’s business spans multiple sectors, with artificial intelligence (AI) being the most prominent. Since TSMC manufactures chips for major chip companies including Nvidia, AMD, and Broadcom, it plays a crucial role in the AI industry.

TSMC’s advantage in wafer manufacturing lies in its absolute dominance of market share. Not only does TSMC produce high-efficiency chips required for AI for companies like Nvidia and AMD, but it also holds nearly 72% of the global foundry market share, far exceeding Samsung’s 7%. This near-monopoly position allows TSMC to control pricing and technological pace, making it difficult for competitors to challenge its position in the short term.

As AI applications continue to expand, especially with surging data center demand, TSMC’s future growth potential is enormous. From data centers to smartphones and electronic devices, all products rely on chips. As AI technology penetrates various industries, the increasing demand directly translates into more orders for TSMC. Wall Street analysts forecast a 21% revenue growth for TSMC in 2026, which is impressive for a company nearing a market cap of $1.6 trillion.

While currency fluctuations may impact growth rates measured in USD, TSMC’s market position and future growth expectations remain very stable. Changes in the New Taiwan Dollar to USD exchange rate do affect financial statement figures, but this is a technical accounting issue that does not alter TSMC’s fundamental advantages in the real economy. In the long term, technological leadership and market share are the core factors determining stock price.

Nvidia’s $500 billion order and the golden binding

Another factor supporting TSMC’s future growth is its close partnership with Nvidia. Nvidia (NVDA) collaborates tightly with TSMC in manufacturing GPUs. Nvidia’s Rubin architecture is expected to launch in 2026, featuring a high-efficiency chip based on TSMC’s advanced 3nm process, designed to deliver higher computing power at lower power consumption. Nvidia currently has a backlog of $500 billion in orders, providing solid support for TSMC’s future business expansion.

This collaboration not only boosts TSMC’s revenue growth but also underscores its critical role in the global high-tech industry. As AI demand increases, TSMC’s order volume and revenue are expected to rise further. More importantly, this binding relationship is nearly exclusive; Nvidia’s high-end GPUs almost entirely depend on TSMC’s advanced processes. Even if Samsung or Intel attempt to compete for orders, they will find it difficult to match TSMC’s technological standards and yield performance in the short term.

Three technological advantages consolidating leadership

Process technology leadership: TSMC has achieved volume production of 3nm process, with 2nm expected to enter mass production in the second half of 2026. Competitors Samsung and Intel still face yield and technical challenges in advanced processes. TSMC’s technological lead is expected to last at least 12 to 18 months.

Expansion of CoWoS advanced packaging capacity: AI chips require CoWoS (Chip-on-Wafer-on-Substrate) advanced packaging technology, for which TSMC is nearly the sole supplier. The company is aggressively expanding CoWoS capacity, projected to grow over 50% in 2026 compared to 2025, directly responding to explosive growth in AI chip demand.

Diversified customer base reducing risk: Although Nvidia is TSMC’s largest customer, TSMC also serves AMD, Apple, Qualcomm, Broadcom, and Google among many tech giants. This diversification reduces dependence on any single customer; even if demand from one slows, orders from others can sustain overall performance.

Valuation attractiveness with a P/E ratio of 24

(Source: The Motley Fool)

Comparing TSMC’s stock price with other major tech companies reveals its valuation is relatively low. TSMC’s P/E ratio is expected to stay around 24, indicating its stock price is still more affordable compared to other leading tech firms. Nvidia’s P/E exceeds 50, AMD around 35, making TSMC’s valuation more conservative and offering a margin of safety.

While P/E ratio does not guarantee a stock is cheap, it shows that TSMC’s current stock price is not overvalued. If you are seeking a company with steady growth potential, TSMC is undoubtedly worth considering. Compared to the S&P 500 index (which typically grows about 10% annually), TSMC’s expected growth rate is significantly higher, making it a popular investment choice by 2026.

More importantly, the PEG ratio (Price/Earnings to Growth) analysis shows TSMC’s PEG is close to 1, indicating the stock is attractively priced in the current market environment. For high-quality stocks with PEG ratios between 2 and 2.5, investors are often willing to pay a premium, and TSMC fits this profile. Analysts forecast that over the next 3 to 5 years, TSMC could achieve a steady performance growth close to an average annual rate of 29%, providing investors with stable and predictable returns.

However, investing in TSMC also involves risks. Geopolitical risks are the biggest variable; any deterioration in cross-strait relations could impact TSMC’s operations and stock price. The US-China tech war escalation may restrict TSMC’s shipments to Chinese customers, affecting some revenue streams. Additionally, large capital expenditures are a concern—TSMC invests hundreds of billions of dollars annually to build new capacity. If AI demand falls short of expectations, there is a risk of overcapacity.