Semiconductor stocks have defied the broader weakness in the tech sector this year. While the tech-laden Nasdaq Composite index is down by about 1.5% in 2026, the PHLX Semiconductor Sector index has jumped 25%.
The resilience of semiconductor stocks stems from their indispensable role in our daily lives. From cars to computers to smartphones to factories to artificial intelligence (AI) applications, semiconductors play a critical role across multiple industries.
That's why if you have $1,000 in disposable cash to invest after covering your expenses, closing any high-interest loans, and saving for rough times, Taiwan Semiconductor Manufacturing (TSM 3.08%) would be an ideal investment with that money. TSMC's stock price has already jumped more than 20% in 2026, and it's likely to step on the gas once it releases its first-quarter results on April 16.
Let's see why this stock is poised to soar higher.
Image source: TSMC
TSMC's outstanding growth is sustainable
TSMC has exceeded its Q1 revenue guidance of $35.2 billion. The company recently released its March revenue report, posting a 45% year-over-year increase. Its revenue in the first two months of the year increased by 37% and 22%. In all, TSMC's Q1 revenue increased by 35% year over year in U.S. dollar terms to $35.7 billion, close to the higher end of its guidance range.
NYSE: TSM
Key Data Points
Clearly, TSMC continues to reap the benefits of robust AI hardware demand and its position as the world's largest foundry. TSMC's fabrication plants manufacture chips for fabless chipmakers such as Nvidia, Broadcom, AMD, and Qualcomm. Even Apple and Sony use TSMC's fabs to get chips made for their consumer devices.
AI, however, is now the company's foremost growth driver. This explains why TSMC's revenue growth in Q1 exceeded expectations. Nvidia anticipates combined sales of $1 trillion for its AI-focused data center chips based on the Blackwell and Vera Rubin architectures in 2026 and 2027. That suggests a big improvement over the $193.7 billion data center revenue it reported for fiscal 2026 (which ended in January this year).
Meanwhile, Broadcom sees a 5x spike in its AI chip revenue in just two years. Even AMD is forecasting a significant surge in its revenue through 2030, driven mainly by strong growth in its data center segment. All this suggests that TSMC is well-positioned for secular long-term growth, mainly due to its 72% share of the foundry market, according to Counterpoint Research.
TSMC's earnings could blow past expectations
TSMC is expected to raise the prices of its advanced chips by 3% to 10% this year, followed by further increases through 2029, according to TrendForce. That's not surprising considering that the demand for its advanced chips significantly exceeds supply.
The company's dominant share of the foundry market gives it strong pricing power, potentially setting the stage for stronger-than-expected bottom-line growth. Consensus estimates project a 56% increase in TSMC's Q1 earnings, followed by a slower increase of 40% in Q2.
Its 2026 earnings are estimated to increase by 37%. However, TSMC could easily beat expectations this year, given recent revelations from its customers that indicate a massive revenue spike in the data center business. As such, investing $1,000 in this stock could be a smart move before April 16, as it trades at an attractive 25 times forward earnings despite its market-beating earnings growth.
