Taiwan Semiconductor Manufacturing (TSM): One of the Best Stocks According to AI

We just covered the 10 Best Stocks to Buy Right Now According to AI and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) ranks 1st on this list.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s largest dedicated pure-play semiconductor foundry, serving as the essential manufacturing backbone for the global technology industry. Operating an advanced manufacturing model, TSMC does not design or market its own branded chips; instead, it manufactures semiconductors for the world’s leading technology and chip design firms, including Apple, NVIDIA, AMD, and Broadcom. The company commands an absolute monopoly in leading-edge process nodes, specifically its 3-nanometer and 5-nanometer technologies, which are required to build advanced AI accelerators, high-performance computing systems, and smartphone processors.

Financially, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is undeniably strong, especially based on its record-breaking Q1 2026 earnings presentation. In the first three months of the year, the chip giant reported consolidated quarterly revenue of $35.9 billion, representing a 40.6% year-over-year increase, with 3nm and 5nm technologies accounting for 61% of total wafer revenues. TSMC’s elite pricing power was evident as gross margins reached 66.2%, prompting management to revise its long-term gross margin target upward to 56% and above through the market cycle. Driven by booming demand for AI accelerators, Taiwan Semiconductor Manufacturing raised its full-year 2026 revenue growth guidance to above 30% in US dollar terms.

While we acknowledge the potential of TSM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock .

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