Key Takeaways
- Taiwan Semiconductor Manufacturing (TSMC) is the world’s largest foundry and dominates the industry with a 72% market share.
- TSMC has increased its market share amid the AI investment cycle, despite surging demand for AI chips.
- The company is building Nvidia’s Rubin architecture using its advanced 3-nanometer process, which is expected to drive growth.
- TSMC’s price-to-earnings ratio is under 30 times its full-2025 earnings estimates, making it an attractive investment opportunity.
- Analysts estimate that TSMC will increase earnings by an average of nearly 29% annually over the next three to five years.
Introduction to AI Stock Opportunities
The new year brings a fresh start, and for investors, it’s an excellent opportunity to explore new ideas for their stock portfolios. Artificial intelligence (AI) remains a hot theme for 2026, and despite the hype and soaring share prices, some AI stocks still represent compelling value today. As the article states, "Although the calendar is turning a page, artificial intelligence (AI) remains a hot theme for 2026, just as it has been for most of the past few years." Taiwan Semiconductor Manufacturing (TSMC) is one such stock that could help investors start the new year on the right foot. The stock rose by more than 50% in 2025, yet it may still be the best AI stock to buy in January.
Gobbling up Market Share in the AI Era
TSMC is the world’s largest foundry, and its dominance in the industry is unparalleled. According to estimates from Counterpoint Research, TSMC’s market share (by revenue) of the global foundry market was approximately 72% at the end of the third quarter. As the article notes, "Taiwan Semiconductor is the world’s largest foundry, and to say that it dominates its industry could somehow be an understatement." The company’s scale, equipment, and proprietary processes make it the go-to choice for chip companies, including Nvidia, which has partnered closely with TSMC for its graphics processing units (GPUs). As the article states, "No other company can build as many high-end chips as quickly as this one can. They are the sure thing, and that has value."
Nvidia’s Rubin Chip and TSMC’s Growth
Nvidia’s top AI company has partnered with TSMC to build its Rubin architecture, which is set to arrive on the market in 2026. TSMC is building Rubin using its advanced 3-nanometer process, which will achieve higher performance with less power consumption. As the article notes, "TSMC is building Rubin using its advanced 3-nanometer process, to achieve higher performance with less power consumption." Nvidia recently touted a $500 billion order backlog, which is likely to drive TSMC’s revenue growth. The article states, "Nvidia’s AI success is affecting TSMC, whose own revenue growth has accelerated dramatically over the past few years."
Fantastic Growth at a Compelling Price
TSMC’s price-to-earnings ratio is just under 30 times its full-2025 earnings estimates, making it an attractive investment opportunity. The company is likely to continue growing rapidly, with analysts estimating that it will increase earnings by an average of nearly 29% annually over the next three to five years. As the article notes, "Its price-to-earnings ratio is just under 30 times TSMC’s full-2025 earnings estimates. While that may seem high, the company is likely to continue growing rapidly, as discussed above." Using the price/earnings-to-growth ratio (PEG) to compare TSMC’s growth rate to its valuation, its ratio of roughly 1 signals that the stock is very attractive at its current price.
Conclusion and Investment Opportunity
In conclusion, TSMC is a compelling investment opportunity for those looking for growth at a bargain price. The company’s dominance in the industry, its partnership with Nvidia, and its attractive valuation make it an attractive choice for investors. As the article states, "So even if TSMC’s growth falls a bit short of analyst estimates, investors still have a good chance of achieving strong returns over the long term." With its mission-critical role in the AI boom, TSMC’s stock has a relatively high floor with enough upside to make it a leading investment idea heading into January.
https://www.fool.com/investing/2026/01/01/could-this-be-the-best-artificial-intelligence-ai/