There are currently four companies worldwide valued at over $3 trillion: Apple, Microsoft, Nvidia, and Alphabet. What’s interesting is, they all share a commonality. Whether it’s crafting groundbreaking consumer hardware, managing essential software for businesses, or creating chips that drive the AI revolution, they light up the market in their unique ways.
Meanwhile, there’s Taiwan Semiconductor Manufacturing (NYSE: TSM), which, while not fitting the mold of those giants, plays a crucial role. As of late June 2026, TSMC’s market cap stood at approximately $2.24 trillion, ranking it as the sixth most valuable company globally.
In 2009, a noteworthy signal indicated that Nvidia, a relatively obscure chipmaker, was on the cusp of something big. Interestingly, a company significantly smaller than Nvidia is now generating similar buzz.
So, considering the current figures, getting to that $3 trillion mark doesn’t seem that far-fetched. Let’s dive into how we reached this point.
The Evidence Is Clear
In Q1 2026, TSMC announced revenues of $35.9 billion, which was a 40.6% year-over-year increase. Their net profit surged by 58.3% compared to the previous year, with a gross profit margin of 66.2% and a net profit margin of 50.5%. Just think about that last figure for a moment; TSMC literally makes 50 cents for every dollar earned—an extraordinary feat that many companies aspire to achieve.
For Q2 2026, the company is projecting revenues between $39 billion and $40.2 billion. The growth forecast for the entirety of 2026 is over 30% in USD. If this trend persists, TSMC could easily surpass $150 billion in annual sales this year. If they maintain their margin levels, the earnings outlook could be quite favorable.
To bridge the gap from $2.24 trillion to $3 trillion, stock prices would need to increase by about 34%. Earnings growth has exceeded 50% year-over-year, and the distance between these figures is shrinking.
The AI Connection
While many discussions tend to center around Nvidia regarding AI chips, it’s essential to note that Nvidia, along with AMD and Apple, does not produce its own chips. All of these companies’ advanced processors come from TSMC. They maintain roughly 70% of the global market share in high-end chip manufacturing, and no one is close enough to challenge that at the most advanced nodes.
Advanced technology under 7 nanometers (nms) now constitutes 74% of TSMC’s wafer revenue. This is vital since these cutting-edge nodes demand higher prices and deliver better margins. With AI fueling demand for 3nm and eventually 2nm chips, TSMC stands to benefit significantly as they pay more per wafer and manage more chips.
The demand for building AI infrastructure isn’t just a short-term trend. Major tech players are constructing large GPU clusters, all incorporating TSMC chips. Nvidia’s offering, Blackwell, is complemented by Amazon’s Trainium and Alphabet’s tensor processing units (TPUs). Everything rolls through TSMC’s manufacturing capabilities.
Changes in Arizona
Geopolitical risks have long been cited as a reason to avoid investing in TSMC. With the majority of its critical factories situated in Taiwan, the uncertainty surrounding that region created what many analysts refer to as a “Taiwan discount” on the stock. However, this discount is beginning to diminish.
TSMC is committing $165 billion towards its expansion in Arizona, planning a campus that spans over 2,000 acres, complete with six factories, two advanced packaging facilities, and a research center. Notably, the first Arizona factory has already turned a profit of $514 million within its inaugural year. Phase 2, utilizing 3nm technology, is set to commence in 2027—earlier than initially intended.
As production shifts toward the U.S., institutional investors who previously steered clear of TSM due to geopolitical concerns now have reasons to reconsider. This shift is significant, as increased interest can drive multiples higher, boosting market capitalization alongside earnings growth.
Yet, challenges remain. Escalating tensions in Taiwan pose a risk that analysts can’t fully quantify. Additionally, TSMC relies on equipment manufacturers like ASML Holding, which creates dependencies. Fluctuations in the semiconductor cycle could mean a marked decrease in AI infrastructure spending impacts TSMC’s financials.
However, if there’s a belief in the sustained growth of AI over the next decade—and that someone, in this case, TSMC, has to manufacture all those chips—then their pathway to the $3 trillion club appears clearer than ever.
Is Now the Time to Invest in TSMC?
Before considering an investment in TSMC, it’s worth thinking about the following:
While certain analysts have highlighted ten other stocks they believe deserve immediate attention, TSMC isn’t among them. These stocks are suggested for their potential for impressive returns in the coming years.
In particular, if you look back at past recommendations—imagine if you invested $1,000 based on the suggestion to buy Netflix back in December 2004; your investment would now be worth an astonishing $418,761. Similarly, a $1,000 investment in Nvidia would have grown to around $1,195,804 since April 2005.
It’s important to remember—stock advisor outcomes have averaged a remarkable return of 918%, significantly outpacing the S&P 500’s 208%. Keep an eye out for the latest Top 10 list.
*Stock Advisor will resume on July 4, 2026.
