Taiwan Semiconductor Manufacturing (TSM) is one of the best-performing AI stocks on the US markets, up 42.5% YTD. AI data center spending amongst the top companies in the world has surged in 2025, making companies like TSMC and Nvidia extremely valuable. However, TSMC is the top advanced processor manufacturer, all while its shares remain somewhat inexpensive for investors. If you’re looking to jump in on the AI wave, TSM stock may be a premium investment choice for long-term gains.
In the last five years, TSMC shares have given a ROI of 225%, one of the best amongst AI stocks. Only Nvidia posts a higher ROI in that span among top AI stocks. Additionally, TSMC is coming off a solid Q3 earnings report which sent shares higher earlier this month. TSMC announced a 39% increase in profits in Q3 2025, and a net income of NT$325.3 billion ($10.1 billion), in fact, exceeding the expectations of analysts. TSM earnings and the strong results showed the strength of AI chip demand that is currently driving semiconductor growth.
TSMC’s most recent quarterly results reveal just how much the company is benefiting from the AI boom, and the company expects this trend to continue. The management reaffirmed that TSMC expects AI data center revenue to grow at a compound annual rate in the mid-40% range through 2029. CEO C.C. Wei said on the Q3 earnings call that “AI demand actually continues to be very strong and stronger than we thought three months ago.”
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Furthermore, TSMC (TSM) shares a big factor in common with Nvidia, a dominant market share in its field. Taiwan Semiconductor Manufacturing holds a 90% market share of advanced processor manufacturing. Samsung is the closest rival but is a ways behind, meaning that as the AI race continues on, TSMC will continue to thrive, sending its shares even higher. If the company were to replicate its 42% growth in the past year, investing in TSM stock today could reap you $409 per share. TSMC stock has a price-to-earnings ratio of about 31, which is on par with the P/E ratio of the S&P 500 index and far below the average of 51 for the tech sector.
While you should do your own research before investing in stocks, TSM’s dominant market share makes it a leading choice for stock investors looking to dive into the AI race.