A $100 Billion Reason to Buy Taiwan Semi Stock Now

Taiwan Semiconductor (TSM), the world's largest dedicated semiconductor foundry and one of the most valuable chip companies, handed investors two major reasons to pay attention this week.

On Thursday, July 16, TSMC reported Q2 FY2026 earnings that comfortably cleared Wall Street's expectations. Net profit jumped 77.4% year-over-year (YOY) to NT$706.6 billion ($21.9 billion), surpassing Street's estimate of NT$632.6 billion ($19.6 billion). This proved once again that the artificial intelligence (AI) boom is flowing straight into the company's bottom line.

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Even so, the earnings report is not the week's biggest story. It is TSMC's plan to invest another $100 billion to expand its semiconductor manufacturing footprint across the United States, reinforcing its long-term partnership with Washington while deepening production ties between the U.S. and Taipei.

The commitment pushes the company's total planned investment to $265 billion. Moreover, the expansion will fund four more advanced semiconductor manufacturing facilities, increasing TSMC's total network in the U.S. to 12 leading-edge semiconductor and advanced packaging facilities.

The announcement also marks another milestone in America's push to strengthen domestic chip production. TSMC first committed $65 billion to its Arizona operations through the Biden administration's CHIPS Act. The company later lifted that figure to $165 billion in 2025 after the Trump administration renegotiated several semiconductor agreements.

Now, another $100 billion has entered the picture, making TSMC's American expansion one of the industry's largest investment programs.

Headquartered in Hsinchu City, Taiwan, Taiwan Semiconductor manufactures cutting-edge chips that power high-performance computing systems, smartphones, automotive technologies, Internet of Things devices, AI platforms, and everyday consumer electronics.

Commanding a market cap of $2.13 trillion, it offers wafer fabrication, packaging, testing, mask manufacturing, and engineering support services to some of the global tech giants, including Nvidia Corporation (NVDA), Apple (AAPL), and Broadcom (AVGO).

Investors have rewarded that leadership. TSM stock rallied 61.7% over the past 52 weeks and has already gained 30.7% year-to-date (YTD). But the momentum cooled in recent weeks, with the shares decreasing 8.5% over the last month.

The strong run has naturally lifted the stock's valuation. Its shares are currently trading at 27.17 times forward adjusted price-to-earnings Non-GAAP and 11.67 times sales. Both multiples sit above their respective five-year average multiples, indicating that investors continue to assign a premium to its market leadership.

Also, the company rewards shareholders with regular cash returns. TSMC last paid an annual dividend of $2.76 per share, yielding 0.67%. It is scheduled to distribute its latest quarterly dividend of $1.11 per share on Oct. 8 to shareholders of record as of Sept. 16.

On July 16, TSMC reported impressive Q2 FY2026 earnings. Total revenue reached $40.2 billion, representing a 36% YOY increase. The result landed at the upper end of TSMC's own guidance in U.S. dollar terms after robust customer demand continued to drive shipments of leading-edge process technologies.

The company also expanded profitability across every major measure. Gross margin climbed to 67.7%, while operating margin reached 60.3%. Net profit margin stood at 55.6%, highlighting the remarkable operating leverage that continues to set TSMC apart from most semiconductor manufacturers.

Strong appetite for high-performance computing chips used in data centers, healthy adoption of advanced 3-nanometer and early 2-nanometer technologies, and sustained orders from leading AI chip designers and hyperscalers kept the company's most advanced manufacturing lines running at full speed.