Taiwan Semiconductor Manufacturing (TSM +2.42%) is off to a strong start this year, despite the tech sector downturn. It's up 13% year to date as of March 24 due to its crucial role in artificial intelligence (AI) chip manufacturing.
TSMC has traditionally had a cyclical business, and after its recent growth, there's concern that the valuation is getting frothy. However, revenue projections indicate that this tech giant still has ample room to grow.
Image source: Taiwan Semiconductor Manufacturing.
In what has become a regular occurrence, this company's Q4 2025 earnings were full of good news for investors. Net income and earnings per share (EPS) increased by 35%, and revenue increased by 20.5% year over year.
But perhaps the most exciting update came during the earnings call, when CEO C.C. Wei said that TSMC is raising its revenue forecast for AI accelerators, which accounted for a high-teens percentage of the company's total revenue in 2025. TSMC now expects AI accelerator revenue to grow at a mid-to-high 50% compound annual growth rate (CAGR) through 2029.
Last year, TSMC projected a mid-40% CAGR for AI accelerators. The updated forecast indicates that demand from AI companies is even greater than the chip manufacturer expected.
NYSE: TSM
Key Data Points
TSMC stock has been soaring because of its excellent sales growth and its dominant market position, with a 72% share of the pure foundry market as of Q4 2025. Its dominant market share isn't going away anytime soon -- in fact, it increased by 6% since Q3 2024 -- and recent forecasts suggest sales growth will continue.
