1 Artificial Intelligence (AI) Winner Hiding in Plain Sight for 2026

TSMC (NYSE: TSM), the world's largest and astir precocious declaration chipmaker, mightiness not initially look similar a high-growth artificial quality (AI) stock. Yet implicit the past 5 years, its shares person rallied by much than 170% arsenic AI chipmakers lined up to usage its plants. Let's spot wherefore it could inactive beryllium 1 of the champion AI stocks hiding successful plain show for 2026 and beyond.

TSMC, based successful Taiwan and operating plants successful different countries, manufactures the world's smallest, densest, and astir power-efficient chips. Most of the world's "fabless" chipmakers -- including Nvidia (NASDAQ: NVDA), AMD (NASDAQ: AMD), Broadcom (NASDAQ: AVGO), and Apple -- trust connected TSMC to nutrient their astir precocious chips.

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In 2025, TSMC's gross roseate 36% successful USD terms. Most of that maturation was driven by its accumulation of high-performance computing (HPC) chips -- which see Nvidia and AMD's AI-oriented information halfway GPUs. Its HPC gross surged 48% during the year, accounting for 58% of its apical line. Nearly each of its different markets grew by the treble digits. It generated 60% of its gross from its densest 3nm and 5nm processes.

TSMC's gross and operating margins besides expanded for the full year, indicating it has ample pricing powerfulness arsenic request for caller AI chips outstrips its capacity, and its EPS surged 46%. For 2026, it expects its gross to emergence astir 30% successful USD presumption arsenic the AI roar continues.

From 2024 to 2029, TSMC expects its CAGR to "approach 25%" successful USD terms. Based connected that rosy outlook, its banal inactive looks reasonably valued astatine 27 times guardant earnings. It besides expects its gross borderline -- which came successful astatine 60% successful 2025 -- to enactment supra 56% done that cycle.

Many tech giants, including Microsoft (NASDAQ: MSFT) and Meta (NASDAQ: META), program to importantly ramp up their AI infrastructure spending successful 2026 and beyond. That means they'll bargain much AI chips from companies similar Nvidia, AMD, and Broadcom -- each of which request TSMC to manufacture their finished chips. TSMC besides aims to support its process pb implicit different foundries by ramping up accumulation of its smallest 2nm chips successful the 2nd fractional of 2026.

Moreover, TSMC volition proceed to grow its overseas plants -- particularly successful Japan, the U.S., and Europe -- to code the looming risks of a subject struggle betwixt Taiwan and China. All of these near-term catalysts should marque TSMC a apical AI banal to bargain this year.