Who Are the Biggest Winners from Taiwan Semiconductor Manufacturing's Blowout Quarterly Report?
Key Points
Other companies are set to benefit from TSMC's strong report and increase capital expenditures, including its chipmaking customers.
As the sole provider of the machines that can manufacture advanced chips, ASML will also be a big winner.
Memory makers and cloud companies should also benefit from TSMC's increased capex.
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Taiwan Semiconductor Manufacturing (NYSE: TSM) recently reported a blowout quarter, sending its stock higher. However, it's not the only stock set to be a winner from its strong report and outlook.
When the company projected it would spend between $52 billion and $56 billion in capital expenditures (capex) in 2026, up from $41 billion in 2025, it sent a clear message that the demand for artificial intelligence (AI) chips has staying power. Let's look at other stocks set to benefit from the same dynamics it's seeing.
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AI chipmakers
TSMC ramping up capex to build out new fabs is good news for its customers, who it said continue to seek out increased capacity. Nvidia (NASDAQ: NVDA) is a clear winner, given that its graphics processing units (GPUs) are the primary chips used to train large language models (LLMs). Given the wide moat it has with CUDA for AI model training, it will continue to be a significant beneficiary of AI infrastructure spending.
Broadcom (NASDAQ: AVGO) is also set to benefit, as it continues to help its customers design custom AI chips. Citigroup analysts see Broadcom having the potential to increase its AI revenue fivefold over the next two years. Advanced Micro Devices (NASDAQ: AMD), meanwhile, has a strong position in the data center central processing unit (CPU) market, and its GPUs should benefit from an expanding market for AI inference, where Nvidia has a narrower moat.
ASML
More capex spending from TSMC means it will need more machines that can manufacture advanced semiconductors. ASML (NASDAQ: ASML) is the big winner here, as it is the only company that makes the extreme ultraviolet lithography (EUV) machines needed to manufacture these chips.
Meanwhile, as TSMC looks to push the limits on advanced chip architecture, it sets AMSL up to eventually begin selling the foundry its newer High-NA EUV platform, which costs nearly double its EUV machines.
Memory makers
For AI chips to perform to their fullest potential, they need high-bandwidth memory (HBM), which is a specialized form of DRAM (dynamic random access memory). The memory market for DRAM is currently very tight, leading to rising prices, and TSMC aggressively spending to increase AI chip capacity is likely only to keep it in short supply. That bodes well for DRAM companies like Micron Technology (NASDAQ: MU), SK Hynix, and Samsung (OTC: SSNL.F), which are all already benefiting from huge demand and increasing prices.
Cloud computing and neocloud companies
Two other segments set to benefit from TSMC's strong outlook are cloud computing and neocloud companies. The big three cloud computing companies -- Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) -- along with Oracle (NYSE: ORCL), are all spending aggressively to build out their data center capacity to meet increasing demand for AI services.
On its earnings call, TSMC CEO C.C. Wei said he spoke to all the big cloud service providers, and they gave him evidence that AI is helping their businesses, and that their infrastructure spending is driving strong returns. Without that assurance and evidence, he would not have increased TSMC's capex to the level he did. That is great news for these companies, as right now, cloud computing is the bigger driver of their businesses.
Meanwhile, this also bodes well for the smaller neocloud providers like CoreWeave (NASDAQ: CRWV) and Nebius Group (NASDAQ: NBIS). These companies specialize in renting out the computer power needed to handle AI workloads, and demand for their services has been through the roof. However, they don't have the balance sheets and free cash flow of the big three cloud computing providers, and are more leveraged plays.
TSMC's commitment to more capex is a big vote of confidence that the economics of the AI cloud computing model work.
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Citigroup is an advertising partner of Motley Fool Money. Geoffrey Seiler has positions in Alphabet, Amazon, and Broadcom. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Alphabet, Amazon, Microsoft, Nvidia, Oracle, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and Micron Technology and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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