TSMC Revenue Jumps 45% As AI Demand Stays Strong: Is The Stock Still A Buy?

Taiwan Semiconductor Manufacturing Company (TSM) makes semiconductors for some of the biggest technology companies in the world, including Nvidia (NVDA), Apple (AAPL), AMD (AMD), Broadcom (AVGO), and Google (GOOGL).

Now, its latest sales numbers are giving investors another reason to believe that the AI boom is still going strong. TSMC reported July revenue of 467.58 billion New Taiwan dollars, or about $14.5 billion. That was 44.7% higher than the same month last year.

TSMC’s AI Business Continues to Grow

TSMC's July sales are important because the company is one of the main manufacturers behind the AI boom. Companies such as Nvidia design powerful AI chips, but they need manufacturers like TSMC to actually produce them.

During its second-quarter earnings report, TSMC said high-performance computing, which includes AI chips, accounted for 66% of its revenue.

The company also reported strong results for the quarter. Revenue jumped 36% year over year to NT$1.27 trillion, or about $39.6 billion. Profit jumped an even stronger 77% to NT$706.56 billion.

TSMC expects its 2026 revenue to grow by slightly more than 40% in U.S. dollar terms. It has also increased its expected capital spending for the year to between $60 billion and $64 billion.

That is a huge investment. But TSMC believes it needs to spend heavily because customers continue to demand more advanced chips.

July's numbers are already ahead of the company's 40% full-year revenue growth target. Still, investors should be careful about reading too much into one month.

Semiconductor sales can move up and down quickly. A strong July does not automatically mean August and September will be just as strong. The broader picture, however, is still positive.

TSMC currently controls about 73% of the global pure-play foundry market, according to Counterpoint Research. Its share was 70% in 2025, 64% in 2024, and 61% in 2023. So, despite growing competition, TSMC is actually boosting its lead.

Nvidia Is a Major Part of the TSMC Story

One of the biggest reasons behind TSMC's growth is Nvidia.

Nvidia depends on TSMC to manufacture many of its most advanced AI chips, including its Blackwell and Rubin architectures. Other major customers include Apple, Qualcomm (QCOM), AMD and Broadcom.

But producing an AI chip is not as simple as making a normal processor. Companies also need advanced packaging to put powerful processors and high-bandwidth memory together. This is where TSMC's CoWoS technology is important.

CoWoS is an advanced packaging technology that helps combine powerful chips and memory in a way that allows AI systems to process information faster.

Demand for this technology has grown alongside the AI boom. TSMC's monthly CoWoS capacity is expected to improve from about 72,000 wafers in 2025 to 113,000 in 2026. TSMC is also using AI inside its own factories.

The company and Nvidia announced a partnership to use Nvidia's AI and accelerated computing technology to improve chip design and manufacturing.

That gives TSMC another potential advantage. The company is not only benefiting from its customers' spending on AI. It is also using AI to make its own operations more efficient.

TSMC CEO C.C. Wei has also pointed to the rise of agentic AI, or AI systems that can perform tasks more independently. According to Wei, this could increase demand for CPUs in AI data centers. Whether those CPUs use x86, Arm or RISC-V technology, TSMC can benefit because it manufactures chips based on these different designs.

TSMC Is Spending Billions to Expand Outside Taiwan

TSMC is not relying only on its factories in Taiwan. The company is expanding in the United States, Japan, and Germany. The goal is to get closer to customers while also reducing some of the risks that come with having so much production concentrated in Taiwan.

The biggest project is in Arizona. TSMC announced another $100 billion investment in the state, bringing its total planned investment in Arizona to $265 billion.

The project is expected to eventually include six semiconductor factories, two advanced packaging facilities and a research and development center.

The first Arizona factory is already producing 4-nanometer chips. A second factory is expected to begin producing 3-nanometer chips in the second half of 2027.

TSMC's Arizona operations reportedly generated nearly $500 million in profit in 2025, their first full year of mass production.

The company is also moving toward 2-nanometer technology, which could be another major source of revenue as customers demand smaller and more powerful chips.

There is, however, a major cost involved.

TSMC CFO Wendell Huang said building factories in the U.S. costs four to five times more than building them in Taiwan.

The company also has to deal with challenges involving workers, water, electricity and visas for overseas employees.

Japan is another important part of the company's expansion. TSMC's first Japanese factory became profitable about 15 months after mass production started. Its second Japanese factory is expected to begin producing advanced 3-nanometer wafers in 2028.

TSMC is also working with Sony on another major project in Japan. The two companies are planning a joint venture that could involve 1 trillion yen, or $6.3 billion, to produce next-generation image sensors.

Sony would own 60% of the venture, while TSMC would own 40%. Mass production could begin as early as 2029.

The companies are looking beyond smartphones. They want to target areas such as autonomous vehicles, industrial robots and physical AI.

Geopolitics Is Still a Major Risk

For all the excitement around TSMC, investors should not ignore the risks. One is the relationship between the United States, China and Taiwan.

China accounted for around 20% of TSMC's business in 2019. That figure has now fallen to 11%-12%, while a company comment put Chinese customers at about 8% of revenue.

U.S. export controls have also made it harder for Chinese companies to access the most advanced chips and chipmaking technology.

TSMC continues to follow U.S. export restrictions, but the ongoing tension creates uncertainty around its future business in China.

The company is also spending heavily on overseas factories, which could put pressure on its margins because those facilities are more expensive to build and operate. And then there is the stock itself.

TSMC shares are up around 48%-50% this year. The semiconductor sector has also done strongly, although it has recently pulled back.

The PHLX Semiconductor Index is still around 72% higher for the year but is down 15% from its June high. That suggests investors are still bullish on AI, but they are more cautious about how much companies are spending to build AI infrastructure.

So, What Does This Mean for Investors?

For now, TSMC's numbers suggest that the AI boom is still very much alive.

July revenue jumped 44.7%. Second-quarter profit jumped 77%. AI demand is strong, and TSMC is spending billions to grow its production capacity.

The company also has a major competitive advantage. It controls about 73% of the pure-play foundry market and counts some of the world's top technology companies among its customers.

But investors should remember that strong demand does not automatically mean the stock will keep rising. Maintaining a strong trading psychology would help in making decisions.

Meanwhile, TSMC has to manage higher costs from its overseas expansion, geopolitical tensions and the possibility that AI spending slows.

So, if you're looking at TSMC as an AI investment, the key question may not be whether AI demand is real. It clearly is.