What Is 1 of the Best Semiconductor Stocks to Buy Now?

Key Points

• Taiwan Semiconductor Manufacturing is a chip foundry with a 70% market share.

• Customers include Nvidia, AMD, Apple, and Intel.

• It's trading at a cheaper valuation than many AI stocks.

• 10 stocks we like better than Taiwan Semiconductor Manufacturing ›

Semiconductor companies have become popular investments for the vital role they play in artificial intelligence (AI) development. But with many of these companies near all-time highs and trading at pricey valuations, it's tough to find great investment opportunities.

Taiwan Semiconductor Manufacturing (NYSE: TSM), or TSMC for short, is one of those companies that recently hit a new high. Despite that, it's still one of the best semiconductor stocks available right now. Here's why.

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Image source: Getty Images.

A dominant chipmaker at a reasonable cost

TSMC is the world's leading semiconductor foundry. Other companies, such as Nvidia and Advanced Micro Devices, design chips, but it's TSMC that manufactures those chips.

Several of the biggest tech companies are customers of TSMC, including the aforementioned Nvidia and AMD, as well as Apple, Intel, and Qualcomm. TSMC also has a 70% share of the global foundry market as of second-quarter 2025, up from 67% in the first quarter of the year. Second-place Samsung Electronics, for comparison's sake, has a 7% market share.

TSMC's market position and customer base make it one of the safer semiconductor companies to invest in. You also don't need to pay a massive premium for it. TSMC is trading at about 28 times forward earnings. Market leader Nvidia costs about 40 times forward earnings at the moment. If you've been looking for a fairly priced semiconductor stock, TSMC fits the bill.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

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Lyle Daly has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Intel, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.