Nvidia Stock May or May Not Soar on May 20, But This Super AI Semiconductor Stock Could Pop and Go On a Terrific Bull Run

Nvidia (NASDAQ: NVDA), the world's largest company by market cap, is set to release its fiscal 2027 first-quarter results (for the quarter ended April 26) after the market closes on May 20. Investors and analysts will be eagerly awaiting Nvidia's quarterly report and outlook to understand the state of the AI economy.

However, it is worth noting that Nvidia stock has been underperforming in recent months despite reporting outstanding numbers and beating Wall Street's expectations. Shares of the semiconductor bellwether have gained 21% over the past six months, which is quite underwhelming given the 73% spike in the PHLX Semiconductor Sector index over the same period.

It is worth noting that Nvidia's shares have retreated five times out of seven following its last seven quarterly reports. It remains to be seen whether Nvidia will pop or drop following its upcoming report. However, there's another semiconductor stock that could get a nice shot in the arm after the AI chip titan delivers its fiscal Q1 results.

Let's take a closer look at that name.

Image source: TSMC.

Nvidia's foundry partner has outperformed the tech giant this year

Nvidia is a fabless chipmaker, meaning it doesn't own any fabrication facilities. It designs its chips and then goes to foundry partners such as Samsung and Taiwan Semiconductor Manufacturing (NYSE: TSM) for the manufacturing part.

TSMC is Nvidia's foundry partner of choice. The Taiwan-based company counts Nvidia as its largest customer. The reason why TSMC is the go-to foundry partner for Nvidia is because of the former's cutting-edge technology, which allows its customers to produce advanced chips based on small process nodes at a massive scale. So, it is easy to see why TSMC stock has jumped 33% in 2026, outpacing Nvidia's gains.

Investors will do well to note that TSMC is miles ahead of the competition in the foundry market. It controlled 72% of the pure-play foundry market at the end of 2025, well ahead of the closest competitor's 7%. What's more, TSMC's share of the Foundry 2.0 market, which includes advanced packaging, semiconductor assembly and test, and photomasking in addition to the pure-foundry model, stood at 38% at the end of 2025.

Counterpoint Research notes that the Foundry 2.0 model has gained prominence in the AI era, where chip manufacturing requires tight integration among manufacturing, assembly, testing, and advanced packaging. The Foundry 2.0 market grew by 16% in 2025 to $320 billion. TSMC grew at a faster pace than the market, clocking 36% revenue growth in 2025

So, TSMC seems to be gaining a bigger share of this market. Market research firm IDC estimates that the Foundry 2.0 market could clock a compound annual growth rate (CAGR) of 11% through 2030.

TSMC is well-positioned to continue dominating this space and capture a larger share. That's because the company's advanced process nodes are experiencing incredible demand from not just Nvidia, but other AI chip designers as well. For instance, Advanced Micro Devices' (NASDAQ: AMD) MI450 data center graphics processing units (GPUs) are being manufactured using TSMC's 2-nanometer (nm) advanced process node.

AMD recently announced it will ramp up production of MI450 GPUs in the second half of 2026. Importantly, AMD management noted on the recent earnings call that the "demand for MI450 series GPUs continues to strengthen, with lead customer forecasts now exceeding our initial plans and a growing number of new customers engaging on large-scale deployments, including additional multi-gigawatt opportunities."

AMD has lucrative partnerships with OpenAI and Meta Platforms to deploy its MI450 GPUs beginning in the second half of 2026, which could supercharge its long-term growth. This also bodes well for TSMC, as demand for the company's 2nm manufacturing node should continue to improve.

Not surprisingly, TSMC is planning to boost its 2nm production capacity at a 70% CAGR between 2026 and 2028. Throw in the price hikes that TSMC is reportedly planning for the 2nm chips, and the company seems well-positioned to capitalize on strong volume and margin growth, which should lead to healthy bottom-line gains.

Buying TSMC stock is a no-brainer

Nvidia recently announced potential revenue of $1 trillion from sales of its Blackwell and Vera Rubin processors in 2026 and 2027, a significant upgrade from its earlier forecast. AMD is also anticipating a major jump in its data center revenue in the coming years. At the same time, other TSMC customers, such as Broadcom and Marvell Technology, have a bright future due to the growing adoption of custom AI processors.

All this explains why analysts have become bullish about TSMC's prospects.

Data by YCharts

Assuming it indeed achieves $24.95 in earnings per share in 2028 and trades at 26.2 times earnings (in line with the tech-focused Nasdaq-100 index's forward earnings multiple), its stock price could reach $653 -- a potential jump of 62% over its current stock price.

However, the actual gains could be bigger, as the growing appetite for AI chips across several applications could set the company up for stronger growth. Moreover, its dominant position in the foundry space could lead the market to reward it with a premium valuation and send its share price skyrocketing by the end of the decade.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Broadcom, Marvell Technology, Meta Platforms, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.