Prediction: TSMC Stock Will Soar After Aug. 26 Thanks to Nvidia’s Historic Quarter

Taiwan Semiconductor Manufacturing (NYSE:TSM) has clocked respectable gains of 35% on the stock market in 2026 so far. However, the foundry giant's returns pale in comparison to the 61% spike in the PHLX Semiconductor Sector index this year.

Popularly known as TSMC, the Taiwan-based foundry and semiconductor packaging specialist is one of the world's most important companies. It manufactures chips for tech giants such as Nvidia (NASDAQ:NVDA), Qualcomm, Apple, Advanced Micro Devices, Sony, and many others. Importantly, TSMC has been growing at a robust pace this year, clocking a 37% increase in revenue in the first seven months.

Nvidia, one of TSMC's most important customers, will report its quarterly results after the market closes on Aug. 26. There is a solid chance that Nvidia's report will give TSMC stock a big boost. Let's see why that may be the case.

Image source: TSMC.

Nvidia is set to deliver a blockbuster quarter, and that's good news for TSMC

Nvidia is expected to account for more than 20% of TSMC's revenue this year, according to Taiwan-based newspaper Economic Daily News. The chip giant is TSMC's largest customer.

Nvidia will start shipping its latest generation Vera Rubin artificial intelligence (AI) chip systems to customers in the second half of 2026. The production of these chips is predicted to ramp up significantly over the next couple of years, according to third-party reports. And now, Bloomberg reports that Nvidia could raise prices of its AI chips by more than 15%.

Nvidia CEO Jensen Huang remarked earlier this year that the company has a massive order book worth a whopping $1 trillion for its Blackwell and Vera Rubin chips for 2026 and 2027. Also, Nvidia's entry into the stand-alone server processor market has opened another phenomenal growth opportunity for the company.

So, there is a strong possibility of Nvidia's quarterly numbers crushing Wall Street's expectations on Aug. 26. The company anticipates $91 billion in revenue for fiscal Q2, which will be a record. Its top line is on track to increase by 95% year over year, indicating an acceleration from its fiscal Q1 revenue growth of 85%.

The company's healthy order book, the arrival of a new generation of chips, and potential price hikes suggest its guidance could be better than Wall Street has penciled in. Consensus estimates project an 82% year-over-year increase in Nvidia's revenue in fiscal Q3, to another record high of $103.8 billion. However, we have already seen that Nvidia's growth rate is picking up this year, and the catalysts discussed above could help it sustain that trajectory.

Nvidia's strong showing should have a positive impact on the semiconductor sector, especially TSMC. Financial newspaper Nikkei Asia reported last month that TSMC could increase the price of its foundry services by 10% in 2027. Bloomberg's report that Nvidia is planning a 15% price hike suggests that TSMC will indeed charge more for its chipmaking services.

As a result, I won't be surprised to see TSMC's growth rate accelerating. The following chart shows that analysts have been gradually increasing their revenue expectations for TSMC.

TSM Revenue Estimates for Current Fiscal Year data by YCharts

Also, the potential price hikes TSMC is reportedly set to implement should ideally lead to a robust increase in its bottom line. So it is easy to see why the company's earnings-per-share expectations have been rising.

TSM EPS Estimates for Current Fiscal Year data by YCharts

Here's why TSMC seems primed for a bull run

Analysts are expecting a 59% increase in TSMC's earnings per share in 2026 to $16.90. However, the previous chart indicates that the growth rate could drop in 2027 before it steps up in 2028.

However, TSMC can outperform market expectations. The AI chip market's revenue is poised for a major jump by 2030, which should help TSMC sustain its robust growth, as it is the world's leading foundry. Not surprisingly, there has been a sharp jump in TSMC's long-term earnings growth expectations.

TSM EPS LT Growth Estimates data by YCharts

Assuming TSMC's earnings increase at an annual rate of 35% over the next five years, its earnings per share could reach $47.75 per share in 2030 (using 2025's earnings per share of $10.65 as the base). If this AI stock trades at 24.1 times earnings at that time (in line with the tech-laden Nasdaq-100 index's forward earnings multiple), its price could jump to $1,150.

That's 182% above its current stock price, suggesting TSMC could make investors significantly richer over the long run. That's why it would be a good idea to buy this semiconductor stock ahead of Nvidia's report, as strong results from its biggest customer could trigger a bull run.

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