Meet the Super Semiconductor Stock That Isn't Nvidia, AMD, or Broadcom

When investors think about semiconductor stocks, Nvidia, Advanced Micro Devices, and Broadcom usually get most of the attention. But all these companies rely heavily on one company to manufacture their chips, and that is Taiwan Semiconductor Manufacturing (NYSE: TSM).

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TSMC, as it's also known, is the largest pure-play foundry, controlling over 70% of the global market. The global foundry market is currently worth nearly $185 billion and is expected to grow to around $360.5 billion by 2036.

Since Taiwan Semiconductor manufactures chips for many designers and technology giants, it benefits from the explosive industrywide demand for cutting-edge chips and is not reliant on any single company or technology.

Powering the AI boom

TSMC's competitive position looks exceptionally strong. In 2025, 3-nanometer chips contributed 24% of its wafer revenue, while 5-nanometer and 7-nanometer chips accounted for 36% and 14% of the wafer revenue, respectively. Overall, advanced technologies of 7-nanometer and below accounted for 74% of total wafer revenue. Additionally, TSMC also commenced mass production of the 2-nanometer chips in late 2025.

This dominance is important, as artificial intelligence (AI) and high-performance computing (HPC) applications are increasingly depending on cutting-edge chip manufacturing. While competing foundries such as Samsung and Intel are investing aggressively, they are still lagging in advanced-node yield.

Management has also reiterated its technology leadership with 2-nanometer and A16 process nodes. The company also expects 2-nanometer to be a bigger node than 3-nanometer from the start, with strong demand already visible across smartphone and HPC AI applications. Hence, customers are relying on TSMC to manufacture high-performance, power-efficient chips with advanced packaging.

Durable growth

TSMC's financial position is also impressive. Revenue rose 35.9% year over year to $33.7 billion. HPC, which includes AI demand, grew 48% year over year and accounted for 58% of the total revenues.

AI is already a solid growth catalyst. Management said AI accelerator revenue made up a high-teens percentage of total revenue in 2025. AI revenue is also expected to grow at a mid- to high-50% annual rate from 2024 to 2029. The company expects its overall revenues to grow at roughly a 25% compound annual rate over that period.

TSMC's near-term momentum is also strong. The company expects revenue to rise close to 30% year over year in fiscal 2026. It is seeing demand far outpacing available supply. Management noted that capacity remains tight, with customers and even their end customers or cloud providers directly requesting more production. The company plans to invest roughly $45 billion in 2026 to expand the production capacity of advanced nodes and advanced packaging.

Why TSMC stands apart

Besides leading in advanced process nodes, TSMC is also strengthening its position in advanced Chip on Wafer on Substrate (CoWoS) packaging, which helps AI chips process data faster by tightly integrating high-bandwidth memory and GPUs.

Bernstein analyst Mark Li also noted that Nvidia, SK Hynix, and Micron Technology are relying on TSMC for HBM base dies, which are processing layers that sit beneath stacked memory chips and help them communicate efficiently.

As a result, a majority of leading logic and memory chip designers are relying on TSMC not only to manufacture but also to package their most advanced chips. Hence, this super semiconductor stock seems a smart pick now.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Micron Technology, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.