Artificial intelligence (AI) has been an incredible market driver in 2025. Large companies, such as Nvidia and Alphabet, are enjoying strong gains, while companies like Palantir Technologies and CoreWeave are attracting investor attention and gaining at even faster rates.
It remains to be seen whether this trend will continue in 2026, but it appears likely. If you have $1,000 available to invest and are looking for a top AI stock to buy right now, Taiwan Semiconductor (TSM +1.51%) 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 manufactures the chips designed by other companies. 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 enables the fabrication of semiconductors.
It has contracts with nearly all the chip designers that are changing the world through AI. These are names like Nvidia, Alphabet, and Advanced Micro Devices. These companies are continually developing more powerful chips, and their trusted partner, Taiwan Semiconductor, is experiencing strong growth as a result.
As hyperscalers like Amazon and Microsoft pour billions of dollars into data centers and AI development, they require more chips. Regardless of which chipmaker they're working with, they're likely to count on TSMC as a partner at some point.
The company has expanded its operations and now has a U.S. presence in Arizona. The very first chip that came off the line was an Nvidia Blackwell chip in October, marking a significant win for both companies. It's already investing $165 billion in Arizona 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 manufactures chips for various types of technology, including smartphones, autonomous vehicles, and 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. Total revenue has increased at a compound annual growth rate (CAGR) of 18.2% since going public in 1994. That is an 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 appears to be an auspicious time to buy shares, as the stock has remained relatively stable over the past few months and is up 46% year to date. The company is expected to report 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.
