Artificial intelligence (AI) has been an incredible market driver in 2025. Large companies like Nvidia and Alphabet are enjoying strong gains, while smaller companies like Palantir Technologies and CoreWeave attract investor attention and are gaining at even faster rates.
It remains to be seen whether or not this will continue in 2026, but it's looking likely. If you have $1,000 available to invest and are looking for a top AI stock to buy right now, Taiwan Semiconductor (TSM +2.79%) is a no-brainer.
Image source: Taiwan Semiconductor.
The foundation of all AI
What sets Taiwan Semi apart from almost any other AI stock is that it makes the chips that other companies design. It's the manufacturer for the brand names, the foundation of their development. It's not the only game in town, but it developed the industry, and it's the biggest: it's been responsible for around 85% of semiconductor start-up product prototypes, and it has a 34% market share in the foundry business, which is the fabrication of semiconductors.
It has contracts with nearly all of the chip designers that are changing the world with AI. These are names like Nvidia, Alphabet, and Advanced Micro Devices. These companies are developing more powerful chips all the time, and their trusted partner, Taiwan Semi, is enjoying strong growth as a result.
As the hyperscalers like Amazon and Microsoft pour billions of dollars into data centers and more AI development, they need more chips. No matter which chipmaker they're working with, they're likely counting on TSM as a partner somewhere along the line.
It has been working on opening up a U.S. location for several years, and it recently opened its first U.S. location, in Arizona. The very first chip that came off the line was an Nvidia Blackwell chip, in October, which was a big win for both companies. It's already investing $165 billion in the Arizona location alone, and it's looking to expand into new U.S. facilities over the next few years, setting itself up for many years of growth. This is an important development, not only because it expands the company's capabilities, but it also allows it to get around the tariffs that have been so challenging for many companies doing business in the U.S. recently.
NYSE: TSM
Key Data Points
More than AI
Aside from its client diversification, which is an excellent feature, it's also diversified by industry. It's benefiting from the tailwinds of AI growth, but it has been around a lot longer than the recent AI craze. It makes chips for many types of technology, including smartphones and autonomous vehicles, in addition to AI. It works with 500 companies, and its semiconductors power 12,000 different products.
However, AI is definitely giving the company a big boost. High-performance computing, which includes AI products, accounted for 57% of total revenue in the third quarter. Revenue has increased at a compound annual growth rate (CAGR) of 18.2% since going public in 1994, which is outstanding performance, and it has accelerated recently; revenue was up 40.8% year over year in the third quarter. However, its highest-growing industries are Internet of Things (IoT) and smartphones.
A stock price that's ready to jump
A great stock is one that you can buy any time, the earlier the better. Taiwan Semiconductor has tremendous growth drivers and opportunities, making it a no-brainer choice for long-term growth.
However, December looks like an auspicious time to buy shares because the stock has stayed relatively stable for the past few months, and it's up 46% year to date. The company reports fourth-quarter and full-year earnings in January, and the stock is likely to jump on positive results, giving you the chance to buy in before the next rise.
