In This Article:
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Taiwan Semiconductor has several key clients in the AI race.
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It just announced stellar monthly growth.
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10 stocks we like better than Taiwan Semiconductor Manufacturing ›
In the realm of artificial intelligence (AI), my top stock pick is Taiwan Semiconductor Manufacturing (NYSE: TSM). Its position within the AI race is one of the most neutral ways to play this theme, and its stock rewarded investors with impressive returns, continuing to notch new all-time highs.
Those highs are likely to keep coming, especially when you consider the performance that TSMC (as it's also known) is putting up. It's one of the fastest-growing stocks on the market, which is even more impressive when you consider its size.
TSMC is a chip foundry, which means it produces chips for companies that can't do it themselves. If you can name a company that's involved in the AI race, the likelihood is nearly 100% that it uses TSMC chips in some way. It's a key supplier for Nvidia, Tesla, Broadcom, and Apple, among many others.
It is the top option in the big tech space for multiple reasons, but chief among them is that it is just a foundry; it's not selling its own products. This means that intellectual property from Nvidia or Apple won't be used for its own purpose to market a chip that could rival what they design. This has become a concern with some other chip foundries, which are often competing against their customers.
Another differentiating factor is that the chipmaker is always one of the first to launch cutting-edge technologies. Its 3-nanometer (nm) chip node has been a big seller and has far surpassed production yields of its competitors.
And management is not stopping there. It's on track to launch a 2nm node later this year and a 1.6nm node next year. This continual improvement cycle is what keeps clients around: They know it's unlikely they'll need to switch suppliers to gain access to the most innovative chips.
As a result of its market position, TSMC continues to win business, but it is also succeeding with longtime customers, which has driven a huge amount of growth.
The chip foundry goes above and beyond to provide investors with valuable information about its business. It announces revenue figures every month, providing an update on how the company is doing, in addition to the standard quarterly updates.
One thing to keep in mind is that these monthly updates can be skewed in favor of one year or another. For example, there were 21 working days in June 2025 but only 20 in June 2024. These comparisons are drowned out in a quarterly view, but you need to be aware of them when examining monthly sales. In any case, revenue rose an impressive 26.9% in June, which followed up strong results in May and April.