What Is 1 of the Best Artificial Intelligence Stocks to Buy Now?
Key Points
The artificial intelligence (AI) industry relies on advanced semiconductor chips sold by businesses such as Nvidia.
One company is a global leader in the manufacturing of AI chips.
In the wake of strong AI demand, this company, popularly known as TSMC, is expanding operations.
- 10 stocks we like better than Taiwan Semiconductor Manufacturing ›
The hot field of artificial intelligence (AI) has boosted the fortunes of many businesses. Perhaps the most famous example is semiconductor chip leader Nvidia. It's a great AI company to invest in, but far from the only one.
Another compelling AI stock to consider is Taiwan Semiconductor Manufacturing (NYSE: TSM), commonly referred to as TSMC. Nvidia is one of its customers, as is major Nvidia competitor AMD.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
Many reasons make TSMC a top AI stock to buy now. Here's a look at some of them to explain why it's a worthwhile investment.
Image source: Getty Images.
TSMC's AI-fueled success
TSMC plays a critical role in the AI industry. It manufactures the advanced semiconductor chips sold by Nvidia and AMD, and is the world's leading foundry in this area.
As a result, TSMC's sales are soaring. In the third quarter, the company reported revenue of 989.9 billion New Taiwan dollars ($33.1 billion), an impressive 30% year-over-year increase. This contributed to 39% year-over-year growth in diluted earnings per share (EPS) to 17.44 New Taiwan dollars ($2.92).
In fact, with the advent of AI, shareholders have been rewarded by TSMC's rising EPS over the past few years.
Data by YCharts.
Given its AI chip manufacturing leadership, TSMC is well-positioned to see continued growth. The customer demand is such that the company is building three new foundries in the U.S., as well as packaging and R&D facilities, totaling a $165 billion investment.
TSMC stock is a buy now because of its share price valuation. Its price-to-earnings (P/E) ratio is notably lower than both Nvidia and AMD.
Data by YCharts.
This indicates TSMC shares possess an attractive valuation compared to its prominent AI peers. It's also far more reasonable than rival Intel, which has a P/E multiple exceeding 4,000.
Combined with growing sales, EPS, and ongoing business expansion, TSMC looks like a great AI investment for the long term.
Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?
Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $540,587!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,118,210!*
Now, it’s worth noting Stock Advisor’s total average return is 991% — a market-crushing outperformance compared to 195% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of December 1, 2025
Robert Izquierdo has positions in Advanced Micro Devices, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
Recommended Articles
