Nvidia Stock Is Up 50% in 2025, but Here's Another Super Semiconductor Stock to Buy Hand Over Fist, According to Wall Street

Semiconductors are technology's building blocks -- the core components in chips that train and power artificial intelligence (AI) across all these data centers you've heard about. Nvidia (NASDAQ: NVDA), which designs and sells these semiconductors, has dominated throughout the artificial intelligence boom; its GPU chips and CUDA programming have been the gold standard for AI data centers. The stock continues to soar, gaining 49% in 2025 alone.

But one super semiconductor stock could be an even better buy right now.

Here is why investors may want to consider buying Taiwan Semiconductor Manufacturing (NYSE: TSM), or TSMC for short, hand over fist.

Image source: Taiwan Semiconductor Manufacturing

TSMC stock has an average price target of $355 among 49 Wall Street analysts

According to price targets compiled by CNN Business, TSMC has an average price target of $355, with a high target of $400 and a low of $290. Based on its current share price, these targets suggest a potential:

• Downside of 3% at the low target.
• Upside of 18% at the average target.
• Upside of 33% at the high target.

In other words, analysts are overwhelmingly bullish on the stock at these prices.

Why analysts are so bullish on TSMC

Of course, the why is more important than the what.

So, what has Wall Street feeling so optimistic about TSMC? For starters, it's the world's leading foundry business. A foundry is a company that manufactures semiconductors, or chips. According to Counterpoint Research, TSMC captured 71% of the global foundry market (by revenue share) in the second quarter of this year.

Perhaps what stands out the most is that TSMC has increased its share over time. Its market share was 63% at the beginning of last year, so TSMC has made some significant strides in just six quarters.

You see, companies like Nvidia and Advanced Micro Devices design the AI chips they sell, but don't manufacture them. Instead, they outsource manufacturing to foundries. TSMC's dominance makes it the de facto choice for these companies because other foundries lack the expertise and production capacity to produce these complex chips at the volumes needed to keep up with demand.

Nvidia has especially moved the needle for TSMC's business through its dominance in the data center space. TSMC manufactures both Nvidia's Hopper chip architecture and its successor, Blackwell. It will also manufacture Blackwell's upcoming successor, Rubin.

The stock could deliver outsize gains over the next three to five years

TSM's foundry dominance makes it a pick-and-shovel stock for the AI and broader semiconductor space because even if Nvidia's market share slips, there's a solid chance that those companies will also be TSM clients. The most important thing for TSM is that broader investments into AI data centers continue.

Fortunately, those tailwinds continue to blow strongly. The major AI hyperscalers, including OpenAI, Meta Platforms, Alphabet, Oracle, and Microsoft, have largely continued to raise their capital expenditure forecasts with recent earnings reports and updates.

Additionally, research from McKinsey & Company estimates that global data center expenditures will need to reach $7 trillion over the next five years to keep pace with the anticipated computing demands created by AI and other technologies.

The data center boom won't last forever, but since every technology uses semiconductors, TSMC isn't solely dependent on data center spending forever. Over the coming years, autonomous vehicles and humanoid robotics, to name a couple, will likely begin to assume some of that demand as those industries emerge.

Currently, analysts expect TSMC's earnings to grow by an average of 29% annually over the next three to five years. The stock trades at roughly 29 times its full-2025 earnings estimates. That growth makes TSMC a bargain at these prices, which probably explains why Wall Street analysts are so bullish. If the business does grow as expected, the stock seems like a likely winner.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Meta Platforms, Microsoft, Nvidia, Oracle, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.