TSMC extends AI lead as AMD faces trade-offs

Taiwan Semiconductor Manufacturing Company has continued an “impressive streak” in early 2026, with its stock up nearly 11% year to date through March 11 and 107% over the past 12 months. The company’s market capitalization now exceeds $1.8 trillion, according to recent commentary.

TSMC’s gains stand out against a backdrop where many large U.S. technology names, including the so‑called “Magnificent Seven,” were not up year to date through March 11. Analysts attribute TSMC’s strength largely to surging demand for chips used in artificial intelligence infrastructure.

TSMC is described as the go‑to semiconductor manufacturer for many leading technology products. It holds roughly two‑thirds of the global foundry market in one analysis and around a 72% share in another, underscoring its role as an “undisputed leader” in contract chip manufacturing.

In advanced AI chips, TSMC’s market share is cited as well over 90% by some estimates. The company controls leading‑edge process nodes that underpin AI accelerators and high‑performance computing chips, making it a central supplier to customers such as Nvidia (NVDA), AMD, Apple (AAPL), and Intel (INTC).

TSMC’s 3‑nanometer production capacity is reported as fully booked, while 2‑nanometer mass production is expected to ramp in 2025–2026. Next‑generation AI GPUs from Nvidia (NVDA) and AMD, along with cutting‑edge CPUs from Apple (AAPL) and Intel (INTC), are said to be lined up on these advanced nodes.

TSMC generated $122.4 billion in revenue in 2025, up nearly 36% from 2024. Over the past five years, its revenue and profits have more than doubled, supported by strong demand for AI chips used in data centers and cloud infrastructure.

High‑Performance Computing accounted for 58% of TSMC’s 2025 revenue and grew 48% year over year, becoming its fastest‑growing segment. While smartphones have historically been the largest business, AI‑related products such as GPUs and accelerators are now the primary growth driver.

TSMC reported record results in 2025, with third‑quarter profit up nearly 40% from a year earlier as AI chip demand surged. Management and industry analysts have discussed AI driving something close to a 60% compound annual growth rate in AI‑linked revenue over the next several years.

Commentary comparing TSMC with Advanced Micro Devices (AMD) notes that both have been strong long‑term performers, with AMD designing AI accelerators and data‑center chips and delivering a 77% return in 2025. However, their business models and risk profiles differ.

TSMC trades at a forward price‑earnings multiple in the mid‑20s, including one estimate of about 24.7 times projected earnings over the next 12 months. AMD, positioned as a prominent AI hardware designer and Nvidia (NVDA) rival, is said to command a higher forward multiple of more than 30 times.

Analysts argue that fundamental metrics between the two are similar, but AMD may need higher capital expenditure to sustain growth, while much of TSMC’s major capex is viewed as already spent. This is presented as a potential advantage for TSMC’s long‑term margin profile.

TSMC’s foundry model spreads AI exposure across data centers, smartphones, PCs, autos, edge AI, and other markets. The company manufactures chips to customer designs, rather than betting on any single GPU or CPU architecture, which is cited as supporting a more resilient earnings base.

By contrast, AMD is characterized as a more narrowly focused chip designer whose upside is closely tied to data‑center AI adoption, share gains versus Nvidia, and continued access to TSMC capacity. Analysts note that high expectations can leave AMD’s valuation sensitive to changes in demand, export rules, or customer capex.

Commentary also highlights that investing in AI hardware is considered complex, with some well‑known investors historically avoiding the sector. Nonetheless, TSMC is described as a key linchpin of the AI hardware stack, central to turning large planned AI infrastructure spending into manufactured silicon.