TLDR
- AI chips have overtaken smartphones as TSMC’s primary growth driver for the first time in over a decade
- Nvidia now accounts for roughly 19% of TSMC’s revenue, edging past Apple’s 17%
- TSMC reported NT$317.66 billion (~$10.1 billion) in February revenue — a 22.2% year-on-year jump
- The first two months of 2026 are up nearly 30% year-on-year, the strongest “off-season” in company history
- TSM trades at ~23x forward earnings with an average Wall Street price target of $423.50, implying 24%+ upside
For years, TSMC’s calendar revolved around Apple. September came, iPhone orders flooded in, and the rest of the world waited. That era is over.
Taiwan Semiconductor Manufacturing Company Limited, TSM
AI chips have now officially dethroned the smartphone as the core driver of TSMC’s business. The street has a name for it: the “Nvidia Flip.”
Nvidia ended 2025 as TSMC’s largest customer, reportedly accounting for around 19% of total revenue — nudging Apple’s 17% into second place. Nvidia has also committed to an order book worth over $95 billion through 2027.
That’s not a minor product mix shift. That’s a restructuring of the entire business.
AI chips are larger, more complex, and more profitable than mobile processors. They require advanced Chip-on-Wafer-on-Substrate (CoWoS) packaging — a technology TSMC has effectively locked up.
Each wafer produced for Nvidia’s Blackwell or upcoming Rubin architecture generates more profit than a mobile chip. The iPhone era was high-volume. The Nvidia era is high-value.
The numbers back this up. TSMC reported consolidated revenue of NT$317.66 billion (~$10.1 billion) for February — a 22.2% increase over the same month last year. February is traditionally a slow month, dragged down by the post-holiday hangover and the Lunar New Year.
Not this time.
Record Sales in the “Dead” Month
The first two months of 2026 are running nearly 30% ahead of the same period last year. That’s the strongest January-February performance the company has ever posted.
The old semiconductor cycle was tied to consumer demand — busy holiday quarters followed by quiet winters. That pattern is flattening. AI infrastructure spending doesn’t follow seasonal rhythms. Nvidia, Broadcom, and the major cloud hyperscalers are in a sustained arms race, and they want every chip TSMC can produce.
TSMC’s 3nm and 5nm nodes are fully booked. The ramp toward 2nm (N2) is ahead of schedule, with yields already reaching 65–75% — an unusually strong result at this stage of a new node’s lifecycle.
To keep pace, TSMC is raising its 2026 capital expenditure to $56 billion.
Valuation Still Reasonable
Despite the stock’s strong run, TSM is trading at roughly 23x this year’s expected earnings per share of $14.54. That’s a measured multiple for a company that controls around 70% of the global advanced foundry market, with Samsung holding roughly 7%.
Nodes at 7nm and below account for 77% of wafer revenue. High-Performance Computing — the category that covers AI accelerators — now makes up 55% of total quarterly revenue.
Wall Street currently rates TSM a Strong Buy, with seven Buy ratings and one Hold. The average price target sits at $423.50, implying over 24% upside from current levels.
TSM is presently trading around $340, roughly 13–14% below its 52-week high, partly due to oil price pressure tied to recent Middle East tensions.
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