Not Nvidia. Not AMD. This Semiconductor Giant Will Be the Ultimate Winner of the Artificial Intelligence (AI) Hardware Race.
Key Points
Taiwan Semiconductor controls a huge part of the chip foundry market.
TSMC believes the current AI build-out will last for several more years.
- 10 stocks we like better than Taiwan Semiconductor Manufacturing ›
Predicting which company will be the ultimate winner in artificial intelligence (AI) isn't easy. One may say it will be the AI companies like OpenAI or Anthropic that will be the winners. Others may point to hardware companies like Advanced Micro Devices (NASDAQ: AMD) or Nvidia (NASDAQ: NVDA). While I tend to lean toward the latter, there's no way to determine whether Nvidia's or AMD's hardware will end up being the most commonly deployed by AI hyperscalers.
Instead, I think there's one pick that will be the ultimate winner, and it stands to benefit regardless of which company has the best AI model and what computing units are used to run the workloads: Taiwan Semiconductor Manufacturing (NYSE: TSM).
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Taiwan Semiconductor has cornered the logic chip market
Taiwan Semiconductor is in a unique place in the AI arms race. Companies like AMD and Nvidia don't build any computing units; they just design the products and farm out manufacturing to other companies. These units obviously contain a lot of chips, and Taiwan Semiconductor is the world's largest and most advanced semiconductor foundry.
According to research by The Motley Fool, Taiwan Semiconductor accounted for about 72% of global foundry revenue at the end of 2025. That's a massive chunk of the market, and with several companies making up the remaining portion, there's really no other option in the industry outside of Taiwan Semiconductor.
So, regardless of whether AMD or Nvidia likes to work with TSMC, they're forced to because it's the only one with the production capacity available to meet the supply demands of these companies. Taiwan Semiconductor has remained a key partner for many companies.
Due to Taiwan Semiconductor's neutral position, as long as there is increased spending on AI over the next few years, it's in the driver's seat to capitalize. Furthermore, it sees elevated demand lasting for a while. During TSMC's last quarterly conference call, CEO C.C. Wei told investors that he expects elevated chip demand to last through at least 2029 or 2030. That's several more years of strong growth, and with TSMC continuously launching new chip technology, it has several built-in price hikes along the way.
Taiwan Semiconductor is an excellent company at the epicenter of the AI build-out. Regardless of the outcome of AI, Taiwan Semiconductor will be a winner, making it one of the safest stocks to invest in this sector.
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Keithen Drury has positions in Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
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