1 Reason Wall Street Is Obsessed With Taiwan Semiconductor Manufacturing

Key Points

• Taiwan Semiconductor Manufacturing's (TSMC) revenue grew 44% year over year to $30 billion in the second quarter.

• TSMC's chips are a critical piece of the AI ecosystem, helping to power data centers that make AI as we know it today possible

• TSMC projects revenue for its AI accelerators to have a compound annual growth rate in the mid-40% through 2029.

• 10 stocks we like better than Taiwan Semiconductor Manufacturing ›

Few companies dominate their industry like Taiwan Semiconductor Manufacturing (NYSE: TSM) (TSMC) does in the semiconductor (chip) space, and Wall Street has taken notice. Through July 25, TSMC's stock is up close to 22% in 2025, while the S&P 500 index is up around 9%.

TSMC has been a vital piece of the tech world for years, supplying chips to top companies that power everything from smartphones to electric vehicles to gaming consoles to data centers. That has made TSMC a stock market darling for quite some time, but Wall Street's recent obsession with the stock comes down to one thing: artificial intelligence (AI).

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Some don't see TSMC as a traditional AI stock, but its role in the AI pipeline is one of the more important. It's essentially the supplier for the advanced AI chips that are critical for training, deploying, and scaling AI models. Without TSMC's chips, the AI world as we know it today would be much less advanced.

Image source: TSMC.

TSMC's AI chip dominance has begun reflecting in its financials, too. In the second quarter, TSMC reported a record $30 billion in revenue (up 44% year over year), with high-power computing (which includes AI chips) accounting for 60% of it.

TSM Revenue (Quarterly) data by YCharts

There's no doubt that AI adoption is rapidly growing. With TSMC's chips being the foundation that will make this adoption possible, the company is well positioned to continue its impressive revenue growth. The company projected its AI accelerator revenue to produce a compound annual growth rate (CAGR) in the mid-40% range from 2024 until 2029, and it's well on its way to accomplishing this.

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Stefon Walters has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.