In this podcast, Motley Fool contributors Jason Hall and Travis Hoium and analyst Tim Beyers discuss:
- Taiwan Semiconductor Manufacturing Company's spectacular Q4 and capex spending plan.
- Which company tops the AI value chain: TSMC or Nvidia?
- Good corporate citizens.
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A full transcript is below.
This podcast was recorded on Jan. 19, 2026.
Tim Beyers: Investors still can't get enough of AI. You're listening to Motley Fool Money. Welcome Fools. I'm your host, Tim Beyers, and with me are two top fools. You've heard many times on these airwaves. Jason Hall and Travis Hoium. Welcome back, guys. To Motley Fool Money. This like your second home? Any fools love hearing you both.
Jason Hall: It's my third. It's your third home.
Tim Beyers: Good.
Jason Hall: You hear me every Tuesday with Emily, so it's pretty regular.
Travis Hoium: It's just a little odd sitting in this guest chair here.
Jason Hall: It's nice, though, Travis. It's nice.
Tim Beyers: I'm grateful because, I am also a fan, so thank you guys for being here. Hopefully, you're fully caffeinated because we have caffeinated results here. We are recording this on Friday for the Monday show for the Martin Luther King junior holiday, more on that in our second segment, but we're going to start with Taiwan Semiconductor, because on Thursday, Taiwan Semi reported some pretty stellar fourth quarter numbers. Revenue jumped 25.5% year over year to 33.73 billion. Gross margin for the quarter was 62.3%. That's pretty good. Operating margin was 54%, net profit margin was 48.3%. Those are Bonkers numbers. Also in the fourth quarter, shipment of three nanometer IPSAS accounted for 28% of total wafer revenue. Five nanometer was 35% and seven nanometer was 14%. This is important because the most advanced chips, so nanometer being really small. Like a three nanometer, these are the most advanced chips. The most advanced chips are accounting for 77% of total WAFR revenue. There is a lot of AI being built, in other words, at Taiwan's Semiconductor factories, and management now expects $52billion-$56 billion in capital spending in this year. On a run rate basis, and I'm going to go to you first on this, Travis. I think I'm going to estimate that about 40% of Taiwan's semi revenue is going to be spent on capital spending. This is crazy. How long can this go on? Just What's your reaction to those Taiwan semi numbers?
Travis Hoium: This can go on for a while, but it really all depends on how long this AI buildout lasts. If we're in the early phases and all of these companies, Open AI is the head of the snake of their ecosystem, but that includes Coreweave and Microsoft. You have, obviously Google, Amazon, all of these companies, the money funnels back to Taiwan Semiconductor in one way or another. That's what's driving this demand. Ultimately, these businesses, though, generally are cyclical. We're seeing that in some of the memory space right now where there's shortages, that's driving prices higher. I think we're going to see this continued spending. They also have a lead that just nobody else can catch up with at the moment. But keep in mind that this is typically a pretty conservative company. Their worry is overspending. I think that's going to level out these capital numbers, whereas another company that's a little bit more aggressive and may have a higher risk profile may actually even be spending more, but, I think if you're a Taiwan semiconductor shareholder, you should love these numbers that we got recently.
Tim Beyers: Jason, so Travis just laid down some knowledge there that is important. I'm going to take the question to you. He said that this is a conservative number $52-$56 billion in capital spending. That's conservative. You tell me, is this the floor of capital spending here right now?
Jason Hall: I don't think we completely know the answer to that because of how the demand side is going to play out and it's going to take time. To build more into, what this number means for context, you guys remember back five or six years ago when the company went from like $50 billion-$70 billion-$100 billion in CAPEX over a five year period. We're more than double that in a single year on an annualized basis. This is a big, number, but I think, AI is driving. Accelerated computing Witarge is driving it, but it's also a company that has fully taken to heart that they do need to expand geographically. They need to de risk from the Taiwan issue, that's a big part of this, too. Europe is going to continue to be a target for expansion in addition to, Arizona and Japan. I think there's more to it. There's the geopolitical part of the story that's also tied to it that's more than just the AI demand. If we continue to see monetization, Travis, we're going to talk about alphabet and how well it's doing in the story of AI and monetization of it with regular people that maybe this does turn out to be the floor, but this might be a peak year for a little while.
Travis Hoium: The other thing that we should mention is that Taiwan Semiconductor is seeing better operating results from some of those non Taiwan factories than I think anybody thought. Maybe they're more efficient in Taiwan, because you have a hub of knowledge in particular. But if they can build a plant in Arizona, and it's maybe a couple of margin points worse, but it's not terrible, then it becomes a real factory. That's real diversification. It's not just token diversification. I think that was the worry with some of the spending before. Now the business becomes, I think, the risked, and that's one of the reasons the multiple has gone up as much as it has. Remember a few years ago, Warren Buffett took a stake, and then he suddenly sold it because he was like, I didn't understand the risk. I think this is a much less risky company, partly because these CAP numbers are so big.
Tim Beyers: Because of it just to be clear on this, you're talking about geographic diversification as a de facto de risk.
Travis Hoium: Exactly. If your biggest risk is geopolitical risk that literally where everything that you have, all of your manufacturing could potentially be destroyed, that's a massive risk that investors have to think about it. The less you have to think about it, the better it is.
Tim Beyers: Jason, I'm going to come to you first on this because we had a debate yesterday. Again, recording on Friday Thursday morning show, there was a debate about which is the more important company when you think about the AI value chain. We just had some spectacular numbers from Taiwan Semiconductor. But we know that Invidia is a heavy in this space, too. I want to know from each of you, starting with you, Jason, which is the one that has the greater impact on the AI value chain. Before you answer, I'm going to give you both some facts about each of these companies. Right now, Taiwan Semiconductor says about 58% of their total revenue is driven by high performance compute. Three nanometer or below. That's not entirely AI chips, but that's a lot of AI chips, 58%. They also have a chokehold on the packaging called OS that's used for AI. They also control 72% of the world's chip foundry production. That is crazy. The thing that's more crazy is that Samsung at Number 2 has seven. Percent of the market. That's outrageous. All of that is amazing, but Invidia is no slouch. Let's talk about Invidia. They hold an estimated 90% plus market share in Data Center AI chips. In the third quarter of fiscal 2026, that's the last quarter they reported $51.2 billion in Data Center revenue, which was up 66% year over year. They also have control of they might be the only one that does full stack system design for AI because they have the CoTA software. For programming GPUs and CPUs for these AI systems, and they have visibility. I'm not sure if I should believe this or not, but, Jason, you tell me they have visibility into what they say is 500 billion, so half $1 trillion of Blackwell and ViRubin revenue. These are the two most recent chip sets coming out of Invidia right now, and then longer term 3 trillion-4 trillion in annual AI infrastructure billed by the end of the decade. Again, Jason, these are just outrageous numbers. You tell me which one is the more important participant in the AI value chain? Is it Taiwan Semi or is it Invidia?
Jason Hall: Invidia is definitely the straw that stirs the drink. There's no doubt about that. If you think about the importance of its chips and software, as you said, across the full value chain. There's no getting around that. That goes back to all of the companies that are building AI that are selling AI products, the companies that are using AI and their businesses. All of those things do come back to Invidia. Now, here's the thing. The straw that stirs the drink, that phrase was coined by Reggie Jackson.
Tim Beyers: Yes I remember.
Jason Hall: He hit a ton of home runs.
Tim Beyers: Yes he did.
Jason Hall: If you look at what Invidia has done is extending its reach as a capital provider across the ecosystem. I don't think we should discount how important that is. But like Reggie Jackson, there's also the potential for a ton of striking out to happen here as it is provided capital across other businesses that are going to need to survive on their own, and also the capital sources that they provided may or may not lead to a lot of that CAPEX spending and future revenue that the company is expecting. Now, TSMC, on the other hand, for me to say that TSMC is more important and maybe prime to be the better business is really predicated on Invidia also being continuing to be really important business and doing really, really well. TSMC, if Invidia, Really strikes out. As a business, we see kind of things start to come unraveled, TSMC is going to suck. It's not going to be good. But I think what we're starting to see is other businesses are starting to show that there is a path forward to build AI that doesn't necessarily all roads don't necessarily have to lead to CUDA and Invidia. It's about a year ago, that Deep Seek, the big thing happened there that rattled the Western AI capital markets when we saw that there is a path to build really good efficient AI and LLMs, they can go beneath CUDA, you don't have to necessarily use CUDA to build those systems. Alphabet I mentioned earlier, is beginning to sell their TPUs. As we're starting to see more specific use case architecture, GPUs aren't necessarily always going to be the answer. As we start to see some more of these products come into the market, AMD is starting to put some legitimate products into the market, as well. I think that there is a case that even if Invidia continues to win, maybe it's not 90% of the market. At the end of the day, no matter who wins, TSMC wins. It is the road that everybody has to take. To get to AI. I don't think we can under appreciate that. Its incentives are built for trust. It has scale that makes it cheaper for everybody that's trying to build hardware and that needs hardware, even at a scale that it can make more money than anybody else that it's competing with.
Travis Hoium: Let's keep this really simple. Do it. If TSMC doesn't exist, your question was, who is the more important company? Yes. TSMT doesn't exist. None of Invidias products, as they currently exist, are going to exist. That makes TSMC the more important company. But the other thing that I want to highlight is the risk profile of these companies are very, very different. 61% of Invidia's revenue comes from four customers. Four. That's companies like Microsoft, Meta, Oracle, Alphabet, probably the four, somewhere around there.
Tim Beyers: We don't know exactly, do we?
Travis Hoium: We don't know exactly who the names are, but it's the big tech company. None of those companies wants to be reliant on Invidia long term. They are all trying to figure out a way out from under Jensen Wong's thumb. TSMC has, I think it's over 1,000 customers. They have a much more stable business, because if Invidia doesn't exist, yes, Jason's right. It's gonna suck for TSMC. But they got lots of other customers that would be happy to take that capacity, and so it's not gonna be game over for them. If TSMC doesn't exist, Invidia basically doesn't exist as we know them today.
Tim Beyers: I'll tell you one that's already fighting Invidia, to get some TSMC time and attention, that would be Apple. Apple is getting crowded out by Invidia right now inside TSMC factories. That's interesting. You both agree that TSMC is at the head of the AI value chain here. Last question on this, and then we're going to move to our second segment because, Jason, you mentioned something interesting, and I had forgotten about this, even though it wasn't that long ago, the way Deep C got around CUDA again, CUDA is the programming language. It's what makes the Invidia solution a full stack solution. They give you the software to run the code that runs on the GPUs that makes AI happen. What Deeps did is they dipped into assembly language. Like you said, they went underneath CUDA. Then they reprogrammed their GPUs to run without having to use KUDA. They got around India. Give me your prediction, starting with you, Travis. How easy is it going to be, or will we see it in 2026 that more companies get around CUDA such that they choose to say, you know what? I don't need Invidia anymore. What is the traction, put another way that non invidia GPUs and CPUs get in 2026?
Travis Hoium: I think what we're going to need to watch is inference. Not necessarily building the models. I think that's where Invidia really has an advantage. That's why you have to build these massive systems that are you know, that's where Blackwell has really excelled. But, you know, is it a little cheaper? Maybe a little bit more accessible to build with an AMD inference GPU? Maybe a TPU, like you mentioned earlier. That's what I think we're going to see more attraction is these companies that are building out their inference infrastructure. Things where they can optimize a little bit more where cost is a little bit more important. They're not going to want to pay Nvidia 80, 90% gross margin for those chips. They're happy to take a little bit a cheaper chip that maybe breaks a little bit more often, maybe is a little less performant. But from a total cost of ownership perspective, it's going to be better for them Walter.
Tim Beyers: Jason, what do you think? What's your guess, your prediction?
Jason Hall: I don't know that 2026 is the year. I think it's going to take longer than that because I think we've got to get to a point where monetization is more clear right now, this is just a land race. This is a land grab. Companies are trying to establish themselves as having dominant products that answer lots of problems and that there's a path for not just people but businesses to buy those AI capabilities or theASC companies to start integrating AI based on those models. I think it's just too early for that. But I think what we are going to see is we're going to see all the big players are going to continue to spend a lot of money with all of these other potential solutions to try to figure it out. But I think we're still a few years away before we see a clear alternative answer to CUDA and Nvidia.
Tim Beyers: 2026, not the year. Up next, we give some honor to doctor Martin Luther King junior, and we talk about the best corporate citizens. You're listening. Do Motley Fool Money.
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Tim Beyers: Welcome back to Motley Fool Money. Today is January 19. Today we honor the memory of the Reverend doctor Martin Luther King junior and his fight for justice and equality in America. We hope you're celebrating with family and friends in honor of doctor King and his legacy. We wanted to take a look at some companies that are putting values in action, and we leaned on several respected independent rankings to ground the discussion. Doctor King often spoke about the moral responsibility and the idea that this shows up in investing when companies align long term success with how they treat people, communities in the world around them, something that's interesting to us here at The Fool. Here are three that have been recognized for aspiring to that standard. I'm just going to start at this top here. Schneider Electric. This is an OTC ticker. I believe it's a French company, but I think Jason is going to give me a bit more on this ticker SBGSY. According to the corporate nights 2025 Global 100 list, they were ranked Number 1. This is the gold standard for quantitative sustainability. They assess over 6,000 companies, and Schneider came in number one. Hewlett Packard Enterprise, Ticker HPE, Just Capital named them in their 2025 rankings of America's most companies. The idea here is that decides to look at democratically weighted, they pull 100,000 Americans to ask what they care about, typically fair wages, worker treatment, things like that, and then rank the Russell 1,000 Index on those specific public priorities. HPE came out Number 1, and then our third candidate here is another HP company, HP Incorporated, Ticker HPQTBL gave them the top ranking among the 100 best corporate citizens of 2025. This used to be corporate responsibility magazine. They focus on transparency and ESG disclosure. They evaluate the thousand largest US public companies using 219, I'm sorry, specific factors across climate, employee relations, and governance, relying on public data. Three highly ranked corporate citizens, Travis, I'll start with you. Of those three, Schneider Electric. Again, Ticker SBGSY, Hewlett Packard Enterprise, Ticker HPE, and HP Incorporated Ticker HPQ. Any of those interest you specifically or belong on an investor swatch list?
Travis Hoium: I think Schneider Electric is one of those companies that has always I've never owned shares, but it's always one of those companies that in this space is always very highly respected. I think that's what's coming through here in these rankings. My my Spidey sense just goes off with two HB companies being in these rankings because I know.
Tim Beyers: Two different kings.
Travis Hoium: Fair enough. It is. But the way that some of these work, and I spent some time doing this in grad school. But, there's a little pay for play with some of these Schneider Electric is one of those that going back to the first time I heard about the company, it was always just a very highly respected company and seemed to be a very well run company. Those are the things that I think come across as that long term consistency in doing the right thing, and that just seems to be something that I always hear about.
Tim Beyers: Durability. Jason, I think you know a little bit more about this company. Tell us a little bit more.
Jason Hall: The way I think about this idea of these businesses and thinking about ethics and how businesses treat all of the different stakeholders, is really focusing on incentives for management because that tells you a lot about how businesses tend to do over the long term. One of the things Schneider has always done pretty well is things like their CEO, part of his compensation is tied to organic growth, not just buying revenue. You can HPs a great example of corporate mergers that destroyed value and didn't create value, but management got paid because it made the revenue line go bigger. Doing things that are tied to creating value is important. If you're focused on that as a manager, you're going to do a lot of creating value for more of your stakeholders as well. I truly believe that. The thing about Snider that's compelling to me as a business in this moment, we were just talking about AI, what is AI? How is AI affecting regular people? It's making energy costs skyrocket. It's putting pressure on grids in developed countries in very real material ways. Sndroelectric, their business is all about efficiency and automation, right, at industrial scale. They're very good at that and they've been good at that for a long time. As a result of focusing on that and compensating management in the right ways, even though this is an industrial manufacturer and they do a lot of software and other things, it's still a price taker business where really you make money by being lean yourself and being efficient in what you do. The stock is it's like a five bagger over the past decade. That's pretty darn good. Of this group of stocks, it's the only one that's come close to beating the market and it's beating it pretty handily, almost 20% a year in total returns over the past decade. That says a lot when you think about sustainability and creating value.
Tim Beyers: It's creating value for communities creating value for shareholders. Schneider Electric on both your watch lists. Absolutely.
Jason Hall: Valuation is a concern, 35 times free cash flow is a lot to pay for a company this scale. That's why it's on the watchlist and not on the buy list, yes.
Tim Beyers: Fair enough. Up next, we preview tomorrow. It's a big week for earnings. We'll get you ready for it. You're listening to Motley Fool Money.
Welcome back to Motley Fool Money. For Tuesday's show, Emily Flipping will be back with more guests and more chatter as we enter the meat of earnings season. It's a big week with both Netflix and Johnson and Johnson reporting results. You really don't want to miss that. Either of you guys have a bet on whether or not we're going to hear an all cash offer from Netflix for Warner Brothers Discovery in the call this week. You want to make that BT? Come on, Travis, you want to make that.
Travis Hoium: I think we do get there. The concern for investors are going to be we talked about this on Friday's show. But what does adding a whole bunch of debt to Netflix mean? Because Disney did it what was that six years ago or so when they bought those Fox assets? It hamstrung them for quite a while. The pandemic didn't help, obviously. But that's something that Netflix has never really had to deal with. This seems like a very big swing, and it's a very defensive swing, which is a surprising turn for Netflix.
Jason Hall: I'm far more interested in learning whether TMs turnaround continues to move apace and what the Perma bears at DR Horton have to say about the new home construction market than I am. Netflix non new information that they're not going to tell us a darn new thing about what's going on with those negotiations. Let's be honest. We'll see something in a filing before we hear their CEOs say anything at all about what's going on over there.
Tim Beyers: Jason is not having it.
Jason Hall: No.
Tim Beyers: Guys, thank you so much for being here. Really appreciate having you on the show today. As always, people on the program may have interest in the stocks they talk about the Motley Fool may have formal recommendations for or against, so don't buy yourself stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. Thank you for tuning in to Motley Fool Money. Our engineer, as always, is the incomparable Tam Boyd. Our producer is on a Chocolate Balu. For Jason Hall, Travis Hoium, I am your host, Tim Byers. Thank you again for tuning in to Motley Fool Money. See you again tomorrow Fools. Move on.
