Taiwan Semiconductor Manufacturing (TSM +0.71%) has had an incredible year to date, rising over 40%. However, it's about 10% down from its all-time high established on June 30. While it has rallied from its lows at the end of July, the stock still has some room to run before getting back to all-time highs. However, I don't think it will be long before it sets new records.
I think Taiwan Semiconductor is well equipped to establish a new all-time high before 2026 is over, making it a solid stock to buy today.
Image source: Taiwan Semiconductor Manufacturing Company.
Taiwan Semiconductor is at the heart of the AI build-out
Few companies are as important to the AI build-out as Taiwan Semiconductor is. While investors may point to AMD (AMD +0.81%) or Nvidia (NVDA -0.98%) as the center, the reality is that these two don't produce any hardware; they contract other firms to do the production work for them. These two are fabless designers and outsource the work to various firms such as Taiwan Semiconductor.
One of the processes they outsource is chip fabrication, and one company has emerged as the top option in this space: Taiwan Semiconductor. While this industry used to be more diversified, Taiwan Semiconductor has complete control over the logic chip fabrication market. According to research by The Motley Fool, Taiwan Semiconductor has a 72% revenue share of the global semiconductor foundry market. That's an incredible chunk, which basically guarantees that as long as there's more spending in the tech sector, Taiwan Semiconductor will be there to benefit.
NYSE: TSM
Key Data Points
This makes Taiwan Semiconductor the ultimate neutral player in the space, as it doesn't care whose computing units are being used, as long as it's the source of the logic chips. With revenue growth staying steady above the 30% mark for nearly the past three years, Taiwan Semiconductor has proven to be a great investment.
TSM Revenue (Quarterly YoY Growth) data by YCharts
There's plenty of growth to be had in the future as well, as Wall Street analysts estimate 43% revenue growth for the remainder of 2026 and 34% in 2027. With the stock priced at 25.5 times forward earnings, it's right where it's usually valued at during this time of the year as well.
TSM PE Ratio (Forward) data by YCharts
With Taiwan Semiconductor projected to grow at a solid pace again next year combined with it trading at a reasonable valuation level, I think it's primed to notch a new high before 2026 is over and also be a market-beating investment into 2027. If you don't own shares of Taiwan Semiconductor, it's not too late, as today's sale price gives you an excellent entry point.
