Taiwan Semiconductor Manufacturing gains 26% this year as the hidden backbone of the AI chip boom

Taiwan Semiconductor Manufacturing Co. (TSM) manufactures the majority of chips designed by Nvidia, AMD, and Broadcom — the three companies racing to supply AI chips to Amazon, Microsoft, and other hyperscalers. In Q1 2025, TSM delivered 35.1% year-over-year revenue growth and 58.3% net income growth, driven entirely by chipmakers' rising orders.

Unlike the flashy chip designers that grab headlines, TSM owns a fortress balance sheet: $94.7 billion in cash against $53.5 billion in liabilities. This lets TSM fund new factories and production capacity without taking on debt or diluting shareholders — the opposite of most AI startups burning cash to scale.

For investors and business professionals: TSM is the unsexy, essential supplier in the AI gold rush. Your favorite AI chipmakers (Nvidia forecasts $78 billion in Q1 FY27 revenue; Broadcom targets $22 billion) cannot deliver their products without TSM's factories. Rising demand for those chips automatically flows to TSM's bottom line, which is why the stock has outperformed the S&P 500 year to date.