Taiwan Semiconductor Manufacturing Company Limited, together with its subsidiaries, manufactures, packages, tests, and sells integrated circuits and other semiconductor devices in Taiwan, China, Europe, the Middle East, Africa, Japan, the United States, and internationally. It provides complementary metal oxide silicon wafer fabrication processes to manufacture logic, mixed-signal, radio frequency, and embedded memory semiconductors. The company also offers customer support and engineering services, as well as manufactures masks. Its products are used in high performance computing, smartphone, Internet of things, automotive, and digital consumer electronics. The company was incorporated in 1987 and is headquartered in Hsinchu City, Taiwan.

TSMC remains one of the highest-quality semiconductor manufacturers in the world, but the market has already priced in very strong expectations. Profitability looks outstanding: operating margin of 56.05%, net margin of 46.46%, ROE of 38.57%, ROA of 26.43%, and ROI of 30.67% — all of these metrics are not only high, but also continue to improve year over year. Revenue, gross profit, EBITDA, and net income are also growing, which confirms the resilience of demand and the effectiveness of business scaling. The balance sheet is strong: cash stands at 114.1 billion, current and quick ratios are above 2, and leverage is low, since debt/equity is only 0.16 and debt has not looked aggressive in recent periods. At the same time, the dividend yield is currently zero, which means the investment case is built almost entirely on growth and revaluation rather than shareholder cash flow. The main limiting factor is valuation: P/E of 40.47, P/S of 15.15, P/B of 13.21, and P/FCF of 59.46 are noticeably above industry medians, indicating a high price for already strong quality. It is especially important that the multiples remain elevated even amid improving fundamentals, meaning the room for further multiple expansion is limited. Earnings and margin growth justify a premium to the sector, but not enough to aggressively raise the target price. For an investor, this is a story of an excellent business with a very strong balance sheet and operational efficiency, but with a high starting valuation and, consequently, a more moderate upside potential. In this setup, it is more reasonable to remain cautious and slightly lower the target, to account for the stock’s expensiveness relative to the quality already achieved.

Taiwan Semiconductor Manufacturing Company Ltd.

Сильный индекс, незначительно упал. Быки в растерянности.

Strong index, slightly down. The bulls are confused.

Сильный индекс, незначительно упал. Рынок на стороне быков.

Strong index, slightly down. The market is on the bulls' side.

Сильный индекс, без изменений. Рынок не поддерживает медведей.

Strong index, flat. The market does not support the bears.

Слабый индекс, незначительно упал

TSMC demonstrates strong growth in profit and margins with low debt, but its high valuation on P/E, P/S, P/B, and P/FCF limits the potential for re-rating.

Key Points
Taiwan Semiconductor expects strong growth for the rest of 2026 and 2027.
Apple stock is expensive considering the company's lackluster growth.
Apple (NASDAQ: AAPL) and Taiwan Semiconductor Manufacturing (NYSE: TSM) have been partners for a long time. Their relationship is pretty simple: Apple designs the chips, then gives those designs to Taiwan Semiconductor to manufacture. This relationship has worked out well over the past few years, and has allowed Apple to become one of Taiwan Semiconductor's largest clients.
But based on the stocks' valuations and how each company expects to grow, I think only one of them is a smart buy right now.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Apple's new chip uses Taiwan Semiconductor's most advanced technology
Apple's new A20 Pro chip appears in its newly launched iPhone 18 Pro and Pro Max, as well as its new folding smartphone, the iPhone Duo. The biggest advancement of this chip is that it uses Taiwan Semiconductor's cutting-edge 2-nanometer (nm) chip production process versus the last generation's 3nm process. This packs more transistors onto a chip in a tighter area and delivers better computing power while reducing energy consumption. That's a win-win for device users, but what about the stocks?
Apple's business is fairly focused: It aims to provide the world's best consumer tech hardware. It has long accomplished that goal with leading smartphones and laptops, but one area where it has clearly fallen behind its peers is in artificial intelligence (AI). Sure, there could be some debate as to the usefulness of some of its competitors' AI features. Still, Apple Intelligence has thus far not lived up to the hype, which could be a problem in the coming years as AI features become more popular and advanced.
Prior to the AI infrastructure build-out, Apple was consistently Taiwan Semiconductor's largest customer, but surging demand for data center GPUs has changed the picture. In 2023, 2024, and 2025, one client (largely assumed to be Apple) made up 25%, 22%, and 19% of TSMC's sales, respectively. TSMC's second-largest customer made up 11%, 12%, and 17% of revenue in those years, and that's widely assumed to be Nvidia (NASDAQ: NVDA). But according to various media reports and Nvidia CEO Jensen Huang, Nvidia recently overtook Apple as TSMC's top client due to the accelerating AI infrastructure build-out. With heavy data center construction expected to last for several more years, Apple may take a back seat to Nvidia with the foundry giant, which could also cost Apple some bargaining power.
Apple is a case of a company not embracing AI right now, while Taiwan Semiconductor is running toward it. I think that puts TSMC in a better position moving forward, and it's already showing up in its growth rate.
Taiwan Semiconductor looks like the far better buy
In 2026, Wall Street analysts expect Taiwan Semiconductor's revenue to grow at a 43% pace in New Taiwan dollars. In 2027, that figure is expected to be 34%. Apple isn't even close, with this year's expected revenue growth to be about 15% and next year's at 10%. One factor that might change this is a subscription AI model from Apple; that could provide its financials with an instant boost. But it may have lost that race already, as there are several great AI options available for iPhone users.
With Apple growing more slowly and maybe missing out on the chance to capitalize on one of the biggest technological revolutions of our time, TSMC looks to be a far better buy. When you take a look at their stock valuations, this hypothesis is confirmed.
Despite Apple's less energetic growth outlook, it trades at a massive premium to Taiwan Semiconductor.
With TSMC expected to outgrow Apple next year and trading at a lower valuation, I don't think there's really much of a debate as to which stock is the better buy. Taiwan Semiconductor is a far better investment than Apple right now, and I think investors will be very happy if they purchase TSMC instead of Apple over the next few years.
Should you buy stock in Taiwan Semiconductor Manufacturing right now?
Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $417,413!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,341,294!*
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*Stock Advisor returns as of September 12, 2026.

Apple and Taiwan Semiconductor Manufacturing Just Announced a Cutting-Edge Chip. 1 Stock Offers Far Greater Upside.

Key Points
ASML has a monopoly on the technology that powers the AI boom.
Taiwan Semiconductor has created a virtual monopoly in advanced chipmaking.
Nvidia has a wide moat in providing the chips for AI model training.
As chief executive officer of Berkshire Hathaway, Warren Buffett often expressed his love for businesses with wide moats and durable competitive advantages. This is evident in Berkshire's top holdings and can lead to strong pricing power and consistent earnings growth.
Let's look at three artificial intelligence (AI) infrastructure stocks with the widest moats that could get Buffett's stamp of approval.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
ASML (NASDAQ: ASML) has a monopoly on the technology that makes the entire AI boom possible. A moat doesn't get any wider than that.
It is the only company in the world that can make extreme ultraviolet lithography (EUV) machines. In fact, competitors stopped trying to develop their own EUV machines years ago, and only now is China trying to catch up.
These machines use light waves to print the crucial circuitry onto chips and are needed to make advanced logic chips like graphics processing units (GPUs). They are also used to make high-bandwidth memory.
As such, demand for these machines is through the roof. The company is also one of the few that make deep ultraviolet (DUV) lithography machines, which handle the less intricate layers in the chipmaking process.
ASML has also developed a newer technology that will eventually be used to advance chip technology even further, called high NA (numerical aperture) EUV, so it's already well ahead of the curve to push its durable, competitive advantage well into the future.
Taiwan Semiconductor Manufacturing
Given the up-front costs and complexity of manufacturing advanced logic chips, most semiconductor companies today rely on third-party foundries to make them. Taiwan Semiconductor Manufacturing (NYSE: TSM) has become the leader in this field through its expertise and scale. As the only foundry that has proved it can consistently produce advanced chips at high yields (few defects) at scale, the company has become a virtual monopoly in the advanced chip manufacturing sector.
As a result, it has become a crucial partner to chipmakers, working in lockstep to help them with their technology road maps. And it has given TSMC (as the company is also known) strong pricing power and great visibility into its business, as it works to expand capacity. And it doesn't matter which chip technology wins out or takes market share, since TSMC manufactures them all.
As a vital cog in the semiconductor value chain, it has established a wide moat with a durable competitive advantage that rivals have been unable to match.
The king of AI infrastructure, Nvidia (NASDAQ: NVDA), is the dominant player in providing the chips used to train AI models. It established a wide moat in this area through its CUDA software platform.
After developing this software, it smartly seeded CUDA into research centers that were doing early work on AI, which led to nearly all foundational AI code being written on its software and optimized for its GPUs. It then extended its moat through networking with its proprietary NVLink system, which essentially lets its chips act as one powerful unit.
Nvidia's GPUs continue to be the main chips used to train AI models, but it has since become a complete AI infrastructure company. With the development of its Vera central processing units and its acquisition of Groq and its language processing units, the company now offers complete server racks built specifically for various AI tasks, including training, inference, and agentic AI. That should be its next big growth driver.
Nvidia continues to see hypergrowth despite its size, and its moat among AI chipmakers remains wide, despite starting to see some increased competition. It remains one of the best AI stocks to own.
Should you buy stock in ASML right now?
Before you buy stock in ASML, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and ASML wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $409,917!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,341,724!*
Now, it’s worth noting Stock Advisor’s total average return is 942% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of September 12, 2026.
Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Berkshire Hathaway, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Warren Buffett Loves Wide Moats: 3 AI Infrastructure Stocks That Fit the Bill

Key Points
Nvidia has delivered record earnings due to its expertise in AI.
TSMC manufactures the chips of Nvidia and other leaders -- and has a keen understanding of the market.
Nvidia (NASDAQ:NVDA) has delivered a winning performance in the artificial intelligence (AI) market, becoming the world's biggest AI chip designer and generating record earnings well into the billions of dollars. In the latest quarter, revenue topped $96 billion, and net income reached $59 billion. The company recognized the AI opportunity early and made this market its focus. This clearly was a wise bet as it's turned out very well for Nvidia and the company's shareholders. The stock has soared 900% over five years.
But one element has weighed on the stock in recent months, and that is the general concern about a potential AI slowdown. Investors have worried that big tech companies are spending too much on a build-out, and that the revenue opportunity may fall short. Such a scenario would be terrible for Nvidia, considering that more than 90% of its total revenue comes from data center sales.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Nvidia and peers have spoken of strong demand, which should reassure investors at least somewhat. And now, an important message from Taiwan Semiconductor Manufacturing (NYSE:TSM) offers us even more very recent visibility on the situation. TSMC just delivered fantastic news for Nvidia shareholders. Let's check it out.
Image source: Getty Images.
Nvidia's GPUs
So, first, a quick catch-up on the Nvidia story so far and a look at the role TSMC plays in the AI space. As mentioned, Nvidia was an early player in AI, shifting the focus of its graphics processing units (GPUs) about a decade ago to this area. GPUs offer the compute power needed for crucial AI tasks, such as the training of large language models. Nvidia didn't stop here and instead built out its capabilities to include other products and services, from networking to enterprise software. Today, Nvidia is a full-stack AI company and even has designed platforms for specific industries, from healthcare to automotive.
At the same time, Nvidia has branched out its presence across the AI market. Most recently, it announced its offer to acquire AI open-source platform Hugging Face. So, Nvidia has built an AI empire, allowing it to benefit in many ways from the growth of this technology.
As for TSMC, it plays a very key role in the world of AI. That's because this company manufactures the AI chips designed by the world's market leaders, from Nvidia to Advanced Micro Devices. Though we may think of Nvidia and AMD as "chipmakers," they actually are "chip designers" — and they rely on TSMC to produce their products.
TSMC's visibility in the AI market
This has resulted in enormous revenue gains for TSMC, as it benefits from growth at many companies — not just one. And this position also gives TSMC great visibility in the market and on what's ahead. The company is in contact with its customers, such as Nvidia, as well as their customers, the cloud service providers. And because of this, TSMC understands the levels of demand and has a solid idea of what's to come.
Now, let's consider the positive news for Nvidia shareholders. TSMC reported record revenue for August, driven by demand for AI chips. Revenue of more than $16 billion represented an increase of 53% year-over-year and 10% from July. And January to August revenue climbed nearly 40% year over year. This reinforces TSMC's ongoing message in recent quarters: AI demand remains consistently high, and this isn't just a general build-out to serve potential business but a build-out to serve customers today.
This fresh report is great news for Nvidia shareholders as it confirms what the chip designer noticed in recent quarters, too — and what cloud giants such as Amazon and Alphabet have said during their latest earnings calls.
This momentum in August, the first full month of Nvidia's fiscal third quarter, offers Nvidia shareholders reason for optimism regarding the company's growth in this period. Even if Nvidia stock doesn't take off immediately, this is one more element that offers us reason to be optimistic about the chip leader in the weeks to come and over time.
Should you buy stock in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $409,917!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,341,724!*
Now, it’s worth noting Stock Advisor’s total average return is 942% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of September 11, 2026.
Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

TSMC Just Delivered Fantastic News for Nvidia Shareholders

The artificial intelligence (AI) infrastructure trade has shifted from pure-play semiconductors to other AI-powered data center infrastructure. The global semiconductor manufacturing equipment and materials industry is growing by leaps and bounds, buoyed by AI-driven capital expenditure in leading-edge logic, high-bandwidth memory (“HBM”) and Test and Packaging components.
On July 14, SEMI reported in its Mid-Year Total Semiconductor Equipment Forecast – OEM Perspective that the market size of this industry is expected to reach a record high of $165.9 billion globally in 2026, up 23.2% year over year. The momentum is set to continue in the near term, reaching an estimated $229.5 billion globally in 2028.
Here, we recommend three stocks from this space for investment to enhance your portfolio returns in the short-term. These companies are: Amkor Technology Inc. AMKR, Ultra Clean Holdings Inc. UCTT and FormFactor Inc. FORM. Each of our picks currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our two picks year-to-date.
Amkor Technology Inc.
Amkor has been benefiting from accelerating AI and HPC packaging demand. Computing revenues were reported at a record level in the second quarter of 2026, up approximately 26% year over year.
AMKR’s Advanced products were reported at $1.557 billion, up 26.79% year over year, reflecting a sustained mix shift toward higher value offerings. Automotive and Industrial revenue also reached a record level, supported by ADAS demand and increasing semiconductor content in next-generation vehicle platforms.
AI-Fueled Growth
Management pointed to accelerating Computing growth of nearly 30% sequentially in the third quarter, driven by AI-powered data center demand and the continued ramp of the HDFO CPU program, partly offset by a high single-digit sequential decline in Communications tied to the planned SiP transition from Korea to Vietnam and the ongoing memory supply constraints.
Recently announced 10-year strategic partnerships with Taiwan Semiconductor Manufacturing Co. Ltd. TSM and a multi-year agreement with NVIDIA Corp. NVDA are reinforcing the company's long-term advanced packaging growth trajectory.
Robust Estimate Revisions
Amkor has an expected revenue and earnings growth rate of 14% and 73.3%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 25% over the last 60 days.
AMKR has an expected revenue and earnings growth rate of 11.8% and 4.3%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 25.9% over the last 60 days.
Image Source: Zacks Investment Research
Huge Price Upside Potential
The stock price has rallied 25.5% year to date. Despite this, AMKR currently has a forward P/E of 19.73X for the current financial year, well below the industry average of 35.91X. The short-term average price target of brokerage firms represents an increase of 47.6% from the last closing price of $49.53. The brokerage target price is currently in the range of $60-90. This indicates a maximum upside of 81.7% and no downside.
Ultra Clean Holdings Inc.
Ultra Clean develops and supplies critical subsystems, components and parts, and cleaning and analytical services for the semiconductor industry in the United States and globally. UCTT offers outsourced solutions for the development, design, component sourcing and cleaning, prototyping, engineering, and manufacturing and testing of advanced systems.
Innovative Products
UCTT offers its customers an integrated outsourced solution for gas delivery systems and other subassemblies, improved design-to-delivery cycle times, component-neutral design and manufacturing and component testing capabilities.
Customers of UCTT are primarily original equipment manufacturers for the semiconductor capital equipment, flat panel, solar and medical device industries. Management said customers are sharing longer-range forecasts as system complexity and manufacturing requirements increase. UCTT sees opportunities to capture more outsourced subsystem work as customers prioritize final integration and testing capacity.
Solid Estimate Revisions
Ultra Clean has an expected revenue and earnings growth rate of 32.1% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 23.6% over the last 30 days.
UCTT has an expected revenue and earnings growth rate of 36.9% and more than 100%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 33.9% over the last 30 days.
Image Source: Zacks Investment Research
Massive Price Upside Potential
The stock price has soared 180.8% year to date. Despite this, UCTT currently has a forward P/E of 24.67X for the current financial year, below the industry average of 28.95X. The short-term average price target of brokerage firms represents an increase of 92.6% from the last closing price of $71.13. The brokerage target price is currently in the range of $120-$150. This indicates a maximum upside of 110.9% and no downside.
FormFactor Inc.
FormFactor is benefiting from robust growth in HBM driven by the rapid adoption of generative AI and high-performance computing. FORM’s strong market position in DRAM, particularly with HBM, is driven by robust demand and the ramp-up of new chip designs like HBM4, expected to further fuel growth in 2026 and beyond.
Strong Market Opportunities
FormFactor benefits as advanced packaging and high-performance compute increase the number and complexity of semiconductor test insertions. Advanced packaging continues to increase test complexity in DRAM, especially as HBM moves to higher speeds. In second-quarter 2026, DRAM revenues reached a record $85 million, with HBM contributing about two-thirds of the total. Management expects third-quarter 2026 DRAM revenues to remain comparable sequentially despite a mix shift toward DDR.
FORM’s Foundry and logic revenues increased to $121.8 million in the second quarter from $111.2 million in the first quarter, led primarily by data-center CPU demand on top of networking, custom ASIC, PC and mobile activity. Management expects continued growth in Q3 across its served applications.
Co-packaged optics (CPO) is moving from development toward higher-volume production and is supporting Systems growth. The opportunity is tied to growing CPO chip volumes and FORM’s position at the first wafer-level test insertion for photonic integrated circuits.
Solid Estimate Revisions
FormFactor has an expected revenue and earnings growth rate of 31.2% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.7% over the last 30 days.
FORM has an expected revenue and earnings growth rate of 9.6% and 18.4%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 4.3% over the last 30 days.
Image Source: Zacks Investment Research
Robust Price Upside Potential
The stock price has jumped 100.9% year to date. Despite this, the short-term average price target of brokerage firms represents an increase of 23.6% from the last closing price of $112.12. The brokerage target price is currently in the range of $64-$175. This indicates a maximum upside of 56.1% and a downside of 42.9%.
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3 Top-Ranked AI Semiconductor Equipment Stocks Amid Huge Price Upside

ASML Holding N.V. ASML is advancing next-generation semiconductor manufacturing through a collaboration with Taiwan Semiconductor Manufacturing Company Limited TSM to support the future development of High Numerical Aperture Extreme Ultraviolet (NA EUV) technology. The initiative aims to improve manufacturing efficiency and help the semiconductor industry fully use the capabilities of this advanced technology.
The partnership plans to establish a 12-inch photomask pilot line by 2031, supporting the broader lithography ecosystem's readiness for advanced-node production by 2033. The transition from existing 6-inch masks to larger 12-inch masks is expected to enhance the value of ASML’s High NA EUV technology by improving fab productivity, lowering chipmaking costs and removing stitching constraints for increasingly complex semiconductor designs.
ASML’s advanced semiconductor manufacturing systems are expected to play an important role as chip designs become more complex, particularly to support artificial intelligence (AI) applications. High-NA EUV adopters and other major suppliers have expressed interest in joining the initiative, supporting the development of a broader ecosystem around the platform.
The transition to larger-format photomasks could extend the technological and economic advantages of ASML’s lithography tools and reinforce the company’s role in developing technologies for future high-performance computing and AI processors.
How Are Competitors Faring?
ASML faces competition from Advanced Energy Industries, Inc. AEIS and Applied Materials, Inc. AMAT. Advanced Energy Industries is growing in the semiconductor market through its advanced power and control technologies. The company is benefiting from growing demand for semiconductor equipment and AI-related data-center infrastructure. Advanced Energy Industries is expanding its manufacturing capacity and ramping new products to support continued growth across its key markets.
Applied Materials is strengthening its semiconductor equipment portfolio to support the production of increasingly advanced chips. The company is investing in technologies such as advanced packaging, deposition and materials engineering to address growing demand for AI and high-performance computing. Applied Materials continues to reinforce its position in the semiconductor manufacturing industry through innovative products and collaborations.
ASML’s Price Performance, Valuation & Estimates
ASML shares have skyrocketed 122.5% over the past year compared with the industry’s growth of 120.8%.
From a valuation standpoint, ASML trades at a forward price-to-sales ratio of 11.85, above the industry tally of 10.99.
Earnings estimates for 2026 have increased 22.9% to $44.99 over the past 60 days, while the same for 2027 have risen 20% to $59.36.
Image Source: Zacks Investment Research
ASML currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
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This article originally published on Zacks Investment Research (zacks.com).

Can ASML's Tie-Up With TSM to Advance High NA EUV Drive Growth?

Key Points
Even if hyperscalers' spending growth slows, semiconductor sales could rise at a fast pace.
Nvidia and Broadcom have seen sales explode as they provide key chips for the largest AI data centers.
This company is even better positioned to provide sustainable earnings growth well into the future.
Semiconductor companies have been among the biggest beneficiaries of the massive AI data center build-out over the last few years. Companies like Nvidia (NASDAQ: NVDA) and Broadcom (NASDAQ: AVGO) are at the center of the industry, with their leading AI accelerator chips. Other chipmakers specializing in memory or networking chips have also seen profits soar and their stock prices rise.
And the incredible growth could continue for years to come. PwC expects total capital expenditures for data centers to climb from $800 billion this year to $1.8 trillion by 2050. More importantly, it's how that spending will be allocated that makes that estimate so bullish for semiconductor stocks. Amazon (NASDAQ: AMZN) CEO Andy Jassy explained on the company's most recentearnings callthat spending will shift toward more semiconductors, suggesting there's a lot of room for revenue growth in semiconductor stocks.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
But Nvidia and Broadcom might not be the best semiconductor stocks right now. Another industry giant could be an even better opportunity to play the long-term growth potential in chips.
The big shift coming in AI data center spending
When you dig under the hood of hyperscalers' massive capital expenditure budgets, there are two core components: the data center buildings and the servers and networking equipment inside them. As Jassy points out, "these have different capital cycles." Data centers depreciate much more slowly than the server racks full of GPUs.
"For our data centers, which have 30-plus-year useful lives, we should get at least five to six generations of server economics," Jassy told analysts during Amazon's second-quarter earnings call. "This means in the short term, when demand is necessitating so many data centers being built simultaneously in advance of when we can start monetizing them, we'll spend a lot of capex and encounter free cash flow headwinds until these data centers come online, can be monetized, and we get a few years into these servers being utilized."
In other words, once a data center is built, Amazon doesn't have to build the data center again. However, it does have to periodically refresh the chips inside of it. As a result, over time, more and more of its capital expenditures will go toward semiconductors. The same is true at all the other hyperscalers.
In fact, Microsoft (NASDAQ: MSFT) CFO Amy Hood said she's already seeing the shift happen for the company's competing Azure cloud computing business. "You've seen our capex really pivot toward what I would call and do call short-lived assets," she said on Microsoft's fourth-quarter earnings call. She noted roughly two-thirds of Microsoft's capex currently goes toward GPUs, CPUs, and other equipment for data centers.
PwC's estimates suggest a significant slowdown in spending at some point over the next decade. But if chips make up a significantly larger portion of the budget in the future, the growth in semiconductor spending can climb at a relatively high pace. That bodes well for one semiconductor stock in particular.
My favorite AI chipmaker right now
Nvidia's leading GPU systems are very likely to retain a significant portion of AI spending well into the future. It's establishing partnerships and even providing funding to ensure its chips continue to find their way into big data centers. That said, there's a growing push toward custom silicon among the hyperscalers. Jassy noted that it's bringing more of its own Trainium chips into its data centers than Nvidia chips this year during Amazon's first-quarterearnings call
Meanwhile, Broadcom is experiencing tremendous growth for its AI business, which includes its partnership co-developing and engineering Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) popular TPU chips. The company recently reported quarterly AI-related revenue growth of 221% with expectations for that number to accelerate next quarter.
But the semiconductor company best positioned to benefit over the long run is Taiwan Semiconductor Manufacturing (NYSE: TSM). The largest contract chip manufacturer in the world works with Nvidia, Broadcom, and almost every other fabless chip designer in the world. It benefits from both its scale and its leading technology, creating a virtuous cycle that's only strengthening amid the AI build-out.
Taiwan Semiconductor Manufacturing, or TSMC as it's known, has grown its market share of third-party chip manufacturing to 73%. That provides huge amounts of revenue ($143 billion over the past 12 months) with which it can reinvest in research and development and additional manufacturing capacity. That allows it to maintain its leading technological capabilities in designing the world's most advanced chips for AI data centers while supplying the capacity hyperscalers demand. That, in turn, ensures it wins more contracts with Nvidia, Broadcom, and everyone else in the future.
No matter which chips hyperscalers decide to put in their data centers, it's very likely they'll be manufactured by TSMC. The stock trades for less than 25 times earnings, despite expectations for revenue growth of around 25% per year and potential for even better earnings growth. That makes it a great buying opportunity with a long runway for growth from here.
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Amazon CEO Andy Jassy Explained Why Semiconductor Sales Could Keep Climbing for Years to Come. Here's My Favorite AI Chipmaker Right Now.

Key Points
Intel's second-quarter revenue rose 25% year over year to $16.1 billion, its strongest growth in more than 15 years.
The data center and AI segment's operating income nearly quadrupled year over year, reaching $2.5 billion.
The stock's price-to-earnings ratio on next year's estimate is about 47, versus about 20 for Taiwan Semiconductor.
Two things at Intel (NASDAQ:INTC) have nearly quadrupled over the past 12 months. One is the quarterly operating income of the chipmaker's data center business. The other is its stock price, which trades near $96 as of this writing, up from a 52-week low of $24.05 and about a third below the high of $142.35 it set in late June.
The rally has lifted Intel's market value to about $500 billion -- this for a company that lost $11 billion on paper in its most recent quarter. And the price is about 47 times what analysts think the company can earn next year.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
The business is improving faster than it has in years. I just don't think it has improved as fast as the price.
Image source: Intel.
The data center business earned the rally
Intel's second-quarter revenue of $16.1 billion was up 25% year over year -- growth CEO Lip-Bu Tan called the company's strongest in more than 15 years.
No part of the company improved more than the data center and artificial intelligence (AI) segment. A year ago, the segment earned $633 million of operating income in a quarter. In the first quarter of 2026, it earned $1.5 billion. And in the second quarter, the figure reached $2.5 billion. Revenue growth is accelerating as well, from 22% in the first quarter to 59% in the second.
Management said the quarter's server growth was the strongest on record. The segment's operating margin, meanwhile, now sits at about 40%.
Companywide, adjusted earnings per share swung from a year-ago loss of $0.10 to a profit of $0.42.
The $11 billion net loss Intel reported for the period, meanwhile, traces to a $12.5 billion noncash charge tied to shares held in escrow for the U.S. government, which took a stake in the company last year. Cash from operations during the quarter was $7 billion.
Is the foundry fixed?
Not yet -- but it is losing money more slowly. Intel Foundry's second-quarter revenue grew 31% year over year to $5.8 billion, and it still lost $2.1 billion at the operating line, an improvement from $3.2 billion in the same period last year. First-half losses total $4.5 billion, down from $5.5 billion a year earlier.
Nearly all of that revenue, however, still comes from Intel buying from itself. Customers outside the company accounted for just $293 million in the period, compared with $22 million in the same quarter of 2025. That leaves external sales at less than 2% of Intel's total revenue.
So far, Intel has yet to announce a high-volume outside customer for Intel 14A, its next-generation manufacturing process. The foundry did sign a named customer in July, when cybersecurity specialist Fortinet picked Intel to build its next security chip. But that chip will use an older Intel process, not 14A.
Of course, the spending comes first. David Zinsner, Intel's chief financial officer, said in the second-quarter earnings release that to support expected growth "this year and next across products and foundry, we are meaningfully increasing our investments in equipment, clean room space, and substrates."
Additionally, Intel sold about 242 million new shares at $95 apiece in August, raising about $23 billion. The sale gives Intel a war chest for the build-out, and it puts the share count about 20% above the year-ago average.
The stock is priced ahead of the business
Intel's adjusted earnings per share total $0.71 through two quarters, and management guided to $0.38 for the third. Even with a stronger fourth quarter, 2026 looks likely to land near $1.50 per share. Analysts expect about $2 next year.
That works out to 47 times next year's earnings with the stock at about $96. Taiwan Semiconductor Manufacturing (NYSE:TSM), the world's largest chip foundry and arguably the finished version of the business Intel is trying to build, costs about 20 times its expected earnings for next year.
In other words, the market is not paying for what Intel earns today. It is paying for what could happen: the data center segment keeps growing quickly, the foundry approaches breakeven, and outside customers sign on in volume. Each looks more believable after the second quarter. But at this valuation, all three need to happen just to hold the current price.
Ultimately, is Intel stock a buy after a year like that? I don't think so.
Growth could keep accelerating, and the foundry's losses could keep narrowing. The second quarter showed both. But the price already assumes years more of it. If I wanted to own a leading-edge foundry today, I'd rather buy Taiwan Semiconductor at less than half the forward price-to-earnings multiple. As for Intel, I'd wait for a better entry point.
Should you buy stock in Intel right now?
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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!*
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Fortinet, Intel, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Should You Buy Intel Stock After a Nearly Fourfold Year?

Key Points
Taiwan Semiconductor's gross margin just reached a new all-time high.
TSMC's profits will continue soaring over the next few years thanks to AI.
Watching company trends is a key part of investing in a stock. When a company creates a new business or sets new records, it completely changes how investors should analyze it, as the company of today is not the same as the one from five years ago. This can affect what a fair valuation is, which could lead to a soaring stock price.
One company that fits this description is Taiwan Semiconductor Manufacturing (NYSE: TSM). It recently set new company records in its margin profile, and I think that primes the stock to set new all-time highs in the near future.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Taiwan Semiconductor is thriving in the AI build-out
Taiwan Semiconductor holds an important position in the artificial intelligence boom. None of the AI hyperscalers or the companies that provide them with computing units manufactures their own chips. Instead, they farm that work out to chip foundries like Taiwan Semiconductor. Taiwan Semiconductor is the world's largest chip foundry and has leading technology.
In fact, research by The Motley Fool shows that at the end of 2025, Taiwan Semiconductor accounted for over 70% of global chip fabrication revenue.
Even if some of TSMC's major clients wanted to switch away from it, they'd have a hard time finding another chip fabricator with capacity that matches what Taiwan Semiconductor offers. As a result, it's well-positioned to thrive in the AI build-out.
Its position has also allowed Taiwan Semiconductor to charge a premium for its services, causing its gross profit margin to soar to new all-time highs.
This allows Taiwan Semiconductor to make a greater profit on each dollar that comes through the door, which is why its profit margins have also reached new levels.
As a result, I'd argue that some of Taiwan Semiconductor's historical valuations no longer apply, as its new profit margin makes for a far better business that should trade at a premium valuation compared to others in the industry. However, that's not what I'm seeing, as the stock isn't priced at a particularly high premium.
With Taiwan Semiconductor's stock often trading at nearly 30 times forward earnings before the year is over, there's plenty of room for upside, which could lead to a new all-time high.
Taiwan Semiconductor is one of the biggest beneficiaries of the AI build-out. It's already having a positive impact on its business, and the stock price will follow closely behind. As a result, Taiwan Semiconductor is a no-brainer buy right now.
Should you buy stock in Taiwan Semiconductor Manufacturing right now?
Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!*
Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of September 8, 2026.
Keithen Drury has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Taiwan Semiconductor Just Set a New Company Record. A New All-Time High Stock Price Is Coming

The pure-play foundry sector continued to benefit from the surge in artificial intelligence (AI)-related demand in the second quarter of 2026, with revenues rising 29% year over year, according to Counterpoint Research. Capacity reallocation remained a major cause of supply-demand imbalances across both advanced and mature nodes. Taiwan Semiconductor Manufacturing Company TSM, or TSMC, maintained its dominant position, capturing 73% market share for the second consecutive quarter. This is supported by the company’s mass production of 2-nanometer (N2) chips, the ramp-up of 3-nanometer (N3) production, tight supply across 8-inch and 12-inch mature nodes and advanced packaging.
Reflecting this momentum, TSM stock has risen 41.1%, far outpacing the sector’s 17.9% growth and the S&P 500 composite’s 12% return.
TSMC remains far ahead of the other pure-play foundries. United Microelectronics Corp. UMC held a 4% share of the market in the first half of 2026, matching its performance from the third and fourth quarters of 2025. Just below UMC, GlobalFoundries GFS maintained a 4% market share throughout 2025, before edging down to 3% in the first half of 2026.
Factors Supporting TSMC
The company’s near-term outlook is being shaped by sustained strong demand for its leading-edge process technologies. The AI boom continues to drive demand for greater computing power, supporting strong demand for leading-edge silicon. Management said its customers and their customers, particularly cloud service providers, continue to provide strong demand signals, keeping its confidence in the multi-year AI trend high.
The rise of agentic AI is bringing CPUs back into a more prominent role in AI data centers, adding to silicon demand beyond AI accelerators. TSMC expects to benefit from this trend, regardless of whether customers use x86, Arm-based or RISC-V architectures. The company is already working with its CPU customers to provide the advanced technologies and capacity needed to pursue opportunities in agentic AI.
TSMC is also stepping up its capital spending, which management says is correlated with higher growth opportunities in the following years. The company is building 13 leading-edge and advanced packaging fabs in Taiwan and plans to continue investing in the country. It also announced an additional $100 billion investment in Arizona for wafer fabs supporting N2 and below technologies, along with advanced packaging facilities, to meet strong multiyear demand from its leading U.S. customers.
Execution also continues for TSMC’s global plan to add three additional N3 fabs — one each in Taiwan, Arizona and Japan to support the robust multiyear pipeline of demand. The company is also converting 5-nanometer (N5) tools in Taiwan to support N3 capacity while optimizing capacity across nodes, including flexible support among N7, N5 and N3.
TSMC’s A14 technology is progressing as planned, with pre-production set for 2027 and volume production in 2028. Compared with N2, A14 is expected to deliver 10% to 15% higher performance at the same power or 25% to 30% lower power at the same speed, along with nearly 20% higher chip density. The company is observing a strong level of customer interest and engagement from both smartphone and High-Performance Computing AI applications, with customer tape-out activity already underway and ahead of schedule.
Technical indicators also signal a sustained bullish trend, as TSMC currently trades above its 50- and 200-day simple moving averages.
TSMC’s Valuation
Based on the forward 12-month Price/Earnings (P/E), TSM trades at 21.84X compared with its median of 24.39X. The stock also stays cheaper than GlobalFoundries, which trades at a P/E of 23.43X compared with the 29.03X median.
Meanwhile, United Microelectronics sits with a P/E of 18.20X, a discount relative to TSMC, though still at a premium to its own median of 16.92X.
Conclusion
TSMC once again maintained a wide lead over its pure-play foundry peers, backed by continued progress in leading-edge process technologies and advanced packaging. Its stock has delivered a stronger return than both the sector and the broader market. The company also sees an opportunity in agentic AI, which is increasing the role of CPUs in AI data centers and adding to demand beyond AI accelerators. TSMC is also expanding its N3 capacity globally while advancing its next-generation A14 technology.
Technical indicators suggest that the shares will continue to rise. With its current earnings multiple still below the historical median, TSMC offers an appealing investment opportunity at this time.
TSM sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Taiwan Semiconductor Retains 73% Foundry Share: Is the Stock a Buy?

Semiconductor stocks have had an impressive year so far after a stellar 2025. Higher demand, driven by continued enthusiasm surrounding artificial intelligence (AI), has made chip stocks one of the most lucrative buys.
Although concerns grew a few months back about the potential of AI stocks given the massive investments being made by big tech companies, the fears have gradually eased after robust earnings from AI giants reinstalled investors’ confidence.
Given the upbeat sentiment, it would be ideal to invest in semiconductor stocks, such as Analog Devices ADI, Taiwan Semiconductor Manufacturing Company Limited TSM, Texas Instruments TXN, NVIDIA Corporation NVDA and ACM Research, Inc. ACMR, which have great potential for growth this year.
Semiconductor Market Continues to Expand
Global semiconductor sales totaled $146.8 billion in July, up 6.4% sequentially from June’s total of $137.9 billion, the Semiconductor Industry Association (“SIA”) reported last week. Year over year, semiconductor sales surged 135.1% in July from last year’s total of $62.5 billion.
John Neuffer, SIA president and CEO, said, “The global semiconductor market grew on a month-to-month basis for the 17th consecutive month in July, and the industry has already reached its highest-ever annual global sales total just seven months into the year.”
Global semiconductor sales have now grown for 17 straight months. Chip sales have also grown in all seven months this year.
AI-related semiconductor stocks came under pressure a couple of months back, as concerns grew over the potential of AI and whether the rapid growth can be sustained. This saw investors rotating out of AI-related chip stocks and taking refuge in more defensive assets.
However, major AI-related semiconductor companies reported robust earnings and issued impressive forecasts last quarter, which have fizzled out the fears, sending chip stocks on a rally once again.
Semiconductor companies have played a major role in driving the broader market’s gains in recent years. The robust jump in July follows a stellar first and second quarter for chip stocks. Worldwide semiconductor sales totaled $403.3 billion in the second quarter of 2026 and $298.5 billion in the first quarter, surging 33.1% and 25% sequentially, respectively.
Semiconductors have become an essential part of almost every modern and emerging technology, powering developments in areas such as the Internet of Things (IoT), 6G connectivity and artificial intelligence.
Rising demand from the automotive industry has also helped drive chip sales higher. At the same time, the AI sector remains in the early stages of its growth, prompting major technology companies to invest billions of dollars in AI research, development and infrastructure.
With these companies continuing to ramp up spending on AI infrastructure, investor sentiment toward semiconductor stocks has remained strong.
5 Semiconductor Stocks With Upside
Analog Devices
Analog Devices is an original equipment manufacturer of semiconductor devices, specifically analog, mixed-signal and digital signal processing (“DSP”) integrated circuits. ADI’s product line comprises amplifiers and comparators; analog-to-digital converters; digital-to-analog converters; video encoders and decoders; embedded processing products and DSPs; MEMS and temperature sensors; RF/IF components and converters; power and thermal management ICs, audio/video converters, amplifiers, CODECs, filters and processors. Analog Devices also offers analog, digital and RF switches and multiplexers; analog microcontrollers; clock and timing products.
Analog Devices’ expected earnings growth rate for the current year is 66.4%. The Zacks Consensus Estimate for current-year earnings has improved 5.2% over the past 60 days. ADI currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Taiwan Semiconductor Manufacturing Company Limited
Taiwan Semiconductor Manufacturing Company Limited is the world's largest dedicated integrated circuit foundry. TSM manufactures ICs for its customers based on their proprietary IC designs using its advanced production processes. Taiwan Semiconductor Manufacturing Company Limited’s goal is to establish itself as one of the world's leading semiconductor companies by building upon the strengths that have made it the world's leading IC foundry.
Taiwan Semiconductor Manufacturing Company Limited’s expected earnings growth rate for the current year is 55.1%. The Zacks Consensus Estimate for current-year earnings has improved 7.6% over the past 60 days. TSM presently carries a Zacks Rank #1.
Texas Instruments
Texas Instruments is an original equipment manufacturer of analog, mixed-signal and digital signal-processing integrated circuits. TXN has manufacturing and design facilities, including wafer fabrication and assembly/test operations in North America, Asia and Europe. Management strategy has been to build assets that would be fully utilized through their lifetimes and outsource any excess demand in peak situations to outside foundries.
Texas Instruments’ expected earnings growth rate for the current year is 55.1%. The Zacks Consensus Estimate for current-year earnings has improved 10.3% over the past 60 days. Currently, TXN carries a Zacks Rank #2.
NVIDIA Corporation
NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphics processing unit, or GPU. Over the years, NVDA’s focus has evolved from PC graphics to AI-based solutions that now support high-performance computing, gaming and virtual reality platforms.
NVIDIA has an expected earnings growth rate of 93.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.2% over the last 60 days. NVDA currently has a Zacks Rank #1.
ACM Research
ACM Research, Inc. develops, manufactures and sells single-wafer wet cleaning equipment, which semiconductor manufacturers can use in numerous manufacturing steps to remove particles, contaminants and other random defects. ACMR is headquartered in Fremont, CA.
ACM Research’s expected earnings growth rate for the current year is 27.3%. The Zacks Consensus Estimate for current-year earnings has improved 49.6% over the past 60 days. ACMR sports a Zacks Rank #1 at present.
Radical New Technology Could Hand Investors Huge Gains
Quantum Computing is the next technological revolution, and it could be even more advanced than AI.
While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.
Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.
Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.
See Top Quantum Stocks Now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report