Taiwan Semiconductor Manufacturing Company (TSMC) has achieved a historic milestone, joining the exclusive trillion-dollar market capitalization club and cementing its position as the world's most critical AI infrastructure enabler. With its stock surging 136.8% since January 2024 and artificial intelligence now driving 50% of its revenue, TSMC represents both the pinnacle of technological advancement and a compelling investment thesis for the next decade.
TSMC's stock price more than doubled from $113 in January 2024 to $240 in July 2025, driven by unprecedented AI chip demand
The Trillion-Dollar Breakthrough: What Happened and Why It Matters
TSMC's ascent to a $1.246 trillion market capitalization in July 2025 marks more than just a numerical milestone—it represents a fundamental shift in how global markets value semiconductor infrastructure. The company became the first Asian stock to achieve this feat since PetroChina's brief achievement in 2007, underscoring the critical importance of advanced chip manufacturing in the modern economy.
The catalyst for this remarkable valuation surge stems from TSMC's unique position as the world's most advanced contract chipmaker, commanding a staggering 92% market share in cutting-edge semiconductor nodes below 7 nanometers. These advanced processes are essential for producing the high-performance chips that power artificial intelligence applications, from NVIDIA's H100 GPUs to Apple's M-series processors.
Key Financial Highlights Q2 2025:
Revenue: $31.93 billion (+39% year-over-year)
Net profit: $16.4 billion (+61% year-over-year)
Gross margin: 58.62%
Operating margin: 49.63%
AI & HPC now dominates TSMC's revenue at 50% in Q2 2025, highlighting the company's successful transformation into an AI infrastructure powerhouse
Goldman Sachs Analysis: The Investment Bank's Conviction Buy Rating
Goldman Sachs has emerged as one of TSMC's most bullish advocates, recently adding the stock to its prestigious Conviction Buy list and raising its price target to NT$1,370 from NT$1,210. The investment bank's analysts, led by Bruce Lu, cite several compelling factors driving their optimism:
Advanced Node Demand Acceleration: Goldman Sachs notes that TSMC's outlook regarding advanced node demand is "increasingly optimistic," with AI clients showing no indications of demand slowdown. The firm expects more substantial price increases in 2026 as capacity constraints persist.
CoWoS Capacity Expansion: The bank significantly raised its forecast for TSMC's CoWoS (chip-on-wafer-on-substrate) shipments to 664,000 units in 2025, 1,080,000 in 2026, and 1,566,000 in 2027—representing substantial upward revisions from previous estimates.
Revenue Growth Trajectory: TSMC management raised its 2025 revenue guidance to 30% year-over-year growth, up from the previous forecast of "mid-20s percent," reflecting stronger demand across all business segments.
The AI Chip Triumvirate: TSMC, NVIDIA, and the Competitive Landscape
The AI chip ecosystem is dominated by three key players, each serving distinct but interconnected roles in the value chain. Understanding their positioning provides crucial insight for investors evaluating exposure to the AI infrastructure boom.
NVIDIA leads AI chip market capitalization at $4.2T, followed by TSMC at $1.25T, highlighting the concentration of value in leading AI infrastructure companies
NVIDIA ($4.2 Trillion Market Cap): The undisputed leader in AI chip design, NVIDIA has secured approximately 70% of TSMC's CoWoS-L advanced packaging capacity for 2025. The company's Blackwell architecture represents the cutting edge of AI processing power, with demand so intense that packaging has become a bottleneck despite TSMC quadrupling its advanced packaging capacity in two years.