The unstoppable Taiwan Semiconductor: Sprinting towards the "Trillion Dollar Club," is it time to buy?

According to the Zhitong Finance APP, there are currently only four companies in the world with a market value of $3 trillion or more: Apple (AAPL.US), Microsoft (MSFT.US), NVIDIA (NVDA.US), and Alphabet (GOOGL.US). The next potential member to join the $3 trillion club, Taiwan Semiconductor, is distinctly different from the aforementioned four. Analysts believe that based on current financial performance, the $3 trillion milestone is not far off, and Taiwan Semiconductor's path is clear.

The commonality among Apple, Microsoft, NVIDIA, and Alphabet is that they either develop the most important consumer hardware on Earth, operate the software infrastructure that businesses rely on, or design chips that drive the AI revolution. Taiwan Semiconductor does not produce end products but provides core components for these companies. As of late June 2026, Taiwan Semiconductor (TSM.US) has a market value of approximately $2.24 trillion, ranking sixth among publicly listed companies globally.

Financial Data Speaks

In the first quarter of 2026, Taiwan Semiconductor achieved revenue of $35.9 billion, a year-on-year increase of 40.6%; net profit grew by 58.3% year-on-year. The gross margin reached 66.2%, and the net profit margin was as high as 50.5%—this means that for every dollar of revenue, the company can retain $0.5 as net profit. Such a level of operational leverage is considered a fantasy for the vast majority of companies.

In the second quarter, management provided revenue guidance of $39 billion to $40.2 billion. The revenue growth rate for the entire year of 2026 (in USD) is expected to exceed 30%. At this trajectory, Taiwan Semiconductor's total revenue for the year will far exceed $150 billion. If the profit margin can be maintained at the current level, the scale of profits will be astonishing.

To move from $2.24 trillion to $3 trillion, the stock price needs to increase by approximately 34%. With a year-on-year profit growth rate reaching 50% or even higher, this gap will quickly narrow.

Taiwan Semiconductor and the AI Mainline

When it comes to AI chips, the market's attention is almost entirely focused on NVIDIA—this is understandable. However, NVIDIA does not manufacture chips itself, nor does AMD or Apple. All advanced processors from these companies are produced in Taiwan Semiconductor's foundries. Taiwan Semiconductor holds about 70% of the global advanced chip manufacturing market share, and no competitor can match it at the cutting-edge process nodes.

Currently, advanced processes of 7 nanometers and below account for 74% of Taiwan Semiconductor's wafer revenue. This structural shift is happening rapidly and is crucial—because leading nodes mean higher prices per wafer and better profit margins. As AI demand drives the ramp-up of 3-nanometer and even future 2-nanometer chips, Taiwan Semiconductor's revenue per wafer will increase, and retained profits will be thicker.

The construction of AI infrastructure is not a short-term demand that lasts one or two quarters. Every major cloud provider is building massive GPU clusters, and every GPU in the cluster is a chip from Taiwan Semiconductor. NVIDIA has Blackwell, Amazon has Trainium, and Google has TPU—all of which are produced through Taiwan Semiconductor's foundries.

Arizona: Changing the Geopolitical Risk Narrative

For many years, the biggest concern about investing in Taiwan Semiconductor Manufacturing Company (TSMC) has been geopolitical risk. All major foundries are located in Taiwan, and the uncertainty in this geographical region has led analysts to apply a "Taiwan discount" in valuations. Now, this discount is narrowing.

TSMC has committed to investing $165 billion in its expansion project in Arizona, planning to cover over 2,000 acres, including six fabs, two advanced packaging facilities, and a research and development center. The first Arizona factory achieved a profit of $514 million in its first year of production. The second phase of the project targets a 3-nanometer process, expected to start production in 2027, a full year ahead of the original schedule.

As more capacity shifts to the U.S., institutional investors who previously avoided TSMC due to geopolitical risks now have reasons to enter. This change should not be underestimated—more buyers chasing the same fundamental story will drive up valuation multiples, which, combined with earnings growth, will push market capitalization higher.

Risks Remain, but the Path is Clear

TSMC is not without flaws. The company is highly dependent on equipment suppliers like ASML for the photolithography tools needed for advanced processes, creating supply chain dependencies. The semiconductor cycle could also turn, and if AI infrastructure spending slows broadly, TSMC's performance will quickly reflect that.

However, if one believes that AI represents a decade-long infrastructure wave and that someone ultimately needs to manufacture all the chips, then TSMC's path to the $3 trillion club is undoubtedly one of the most visible investment logics in the current market