Up Over 100% in 1 Year, Should You Buy Taiwan Semiconductor Manufacturing Company Right Now?

While many big-name tech stocks have struggled to begin the year (none of the "Magnificent Seven" stocks are up year to date through market close on March 11), Taiwan Semiconductor Manufacturing Company (NYSE: TSM) (TSMC) stands out as one that's continuing an impressive streak.

The stock is up nearly 11% to start the year and up 107% in the past 12 months. With a market cap of over $1.8 trillion, is it too late to invest in TSMC, or is there still room for good growth? I believe the latter.

Image source: The Motley Fool.

The undisputed leader in a critical industry

TSMC may not be a household tech name like Apple, Amazon, or Microsoft, but it's one of the most important tech companies in the world. Without it, many of the tech products we use daily would likely be less effective and harder to scale. That's because TSMC is the go-to semiconductor (chip) manufacturer for these products.

TSMC has around a 72% market share of the global semiconductor foundry market. When it comes to advanced artificial intelligence (AI) chips, its market share jumps up to well over 90% by many estimates. Rarely is it a bad idea to invest in a company that commands such a large share of a big industry.

AI needs are fueling growth for TSMC

In 2025, TSMC made $122.4 billion in revenue, up nearly 36% from 2024. In the past five years, its revenue and profits have more than doubled.

TSM Revenue (Annual) data by YCharts.

Much of this growth stems from the rising demand for AI chips used in data centers and cloud infrastructure. TSMC's High-Performance Computing (HPC) segment accounted for 58% of its 2025 revenue and increased 48% from 2024 (its fastest-growing segment).

Smartphones have historically been TSMC's largest segment, but AI-related chips, such as graphics processing units (GPUs) and accelerators, are becoming its primary driver of growth. And this is an area where TSMC has strong pricing power because of the expertise its competitors can't match.

It helps that companies have been rushing to build out AI infrastructure, such as data centers, during the current AI boom. But even aside from that, TSMC would still play a critical role in bringing non-AI-related electronics to life.

A good long-term value

I'm not guaranteeing that TSMC's stock will continue rising over the next year (nobody can predict stock price movements with certainty), but there are very few tech stocks I trust more over the long term than TSMC.

Trading at around 24.7 times its projected earnings over the next 12 months, TSMC's stock doesn't seem as expensive as it could be for a company of its dominance and importance to the tech world. I'd buy the stock and comfortably hold onto it for the long haul.

Stefon Walters has positions in Apple, Microsoft, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Amazon, Apple, Microsoft, and Taiwan Semiconductor Manufacturing and is short shares of Apple. The Motley Fool has a disclosure policy.