Where Will TSMC Stock Be in 3 Years?

Taiwan Semiconductor Manufacturing (NYSE: TSM) is arguably one of the biggest beneficiaries of global infrastructure construction for artificial intelligence (AI). Companies are under pressure to create high-performance chips to design, train, and run AI applications.

The stock of TSMC (as the company is also known) is trading up 170% in the last five years, and the company projects that its revenue will have a compound annual growth rate (CAGR) of 25% through 2029. And that's probably a conservative number when you consider that the AI market size is projected to have a CAGR of 30.6% through 2033, growing to roughly $3.5 trillion.

If TSMC can hit even its own projections, I predict the company will push its market capitalization to nearly $3 trillion before 2030. Here's how it should get there.

Image source: Getty Images.

The road to $3 trillion

First, let's take a look at the math. At the time of this writing, TSMC stock is priced at about $365 per share, with trailing-12-month revenue of $121.48 billion and trailing earnings per share (EPS) of $10.55. The stock trades at a forward price-to-earnings ratio (P/E) of 26.4 -- and that number is important for where we're going.

Taking management's stated projection of a 25% CAGR through 2029, that means revenue would nearly double to $237 billion in 2029. If the company can at least maintain its current margins, then TSMC's annual EPS would reach $20.61 -- again, nearly doubling from its current rate.

Now it's time to look at the forward P/E. Applying that 26.4 number to the projected EPS of $20.61 gives us a share price in 2029 of $543. That's a 48% increase from the price at this writing and pushes the market cap to just over $2.8 trillion.

And keep in mind: That's a conservative number considering the projected growth in the AI space -- much of which will be devoted to chips.

TSMC is an undisputed leader

TSMC doesn't design chips -- companies including Nvidia, Broadcom, and Advanced Micro Devices do that. But they use TSMC for its foundry services. It's the world's leading foundry, making more than 10,000 products a year across hundreds of process technologies.

The company makes more than half of its money from high-performance semiconductors, but it's also a major player in making smartphones, chips for automobiles, and Internet of Things devices. Management said the growth rate for high-performance computing chips grew 48% in 2025.

TSMC's unique role in being the leading chip manufacturer for multiple companies -- all of which are seeing extraordinary demand right now -- makes it an ideal stock as the AI boom continues. I've maintained that TSMC may be the smartest investment you can make today, and it seems destined to challenge, if not clear, the $3 trillion barrier before 2030.

Patrick Sanders has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.