Advanced Micro Devices, Inc.

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Very Bullish +85

Not Nvidia. Not AMD. This Chip Stock Will Be the Biggest Winner of the ...

AI-generated analysis

📈 Omdia estimates global semiconductor revenue could jump 94% in 2026, with AMD predicting the high-performance chip market reaching $2 trillion by 2030.

💰 AMD reported Q2 revenue of $11.5 billion (up 50%) and non-GAAP earnings of $1.66 per share (up 246%), driven by a 107% surge in data center revenue.

🏭 TSMC manufactures chips for major clients including AMD, Nvidia, Apple, Qualcomm, Broadcom, Amazon, Microsoft, and Alphabet, diversifying its AI exposure.

📊 TSMC reported a 45% year-over-year revenue increase in July and is on track to beat its updated 2026 guidance of 40% growth.

🔬 TSMC plans to increase output of its popular 3nm process node by 20% by the end of 2026 while facing significantly higher demand for its 2nm platform.

💵 TSMC holds a dominant 73% foundry market share, allowing it to implement a 25% price increase next year for customers purchasing additional AI chips.

📉 TSMC stock has jumped 76% over the past year but trades at an attractive 25 times forward earnings compared to the iShares Semiconductor ETF's 67x multiple.

🚀 Analysts project TSMC could reach a price of $848 by 2028 if it trades at 30 times earnings with EPS reaching $28.26, nearly doubling its current price.

Bullish Signals
  • AMD reported a 50% year-over-year revenue increase to $11.5 billion in Q2 and non-GAAP earnings surged 246% to $1.66 per share.
  • TSMC's revenue increased by 45% year-over-year in July, indicating strong momentum ahead of its updated 2026 guidance of 40% growth.
  • TSMC maintains a dominant 73% market share in the foundry space, providing significant pricing power and stability against competitors like Samsung.
  • The company plans to increase output of its 3nm process node by 20% by the end of 2026 while demand for its advanced 2nm node remains significantly higher.
  • TSMC is diversified across multiple major clients including Apple, Qualcomm, Broadcom, Amazon, Microsoft, and Alphabet, reducing reliance on any single customer.
  • Analysts view TSMC as undervalued at 25 times forward earnings compared to the broader semiconductor ETF's 67x multiple, suggesting potential for significant upside.
Full Analysis
The article argues that while AMD and Nvidia are benefiting from the AI boom, Taiwan Semiconductor Manufacturing (TSMC) offers a superior investment opportunity due to its critical role as a foundry for both companies. Omdia estimates the global semiconductor industry revenue could jump 94% in 2026, with AMD predicting the high-performance chip market reaching $2 trillion by 2030. AMD recently reported strong Q2 results with revenue up 50% year-over-year to $11.5 billion and non-GAAP earnings surging 246% to $1.66 per share, driven by robust demand for server CPUs and GPUs. The company anticipates a 41% revenue increase in the current quarter, potentially exceeding estimates due to new Helios rack-scale server platform launches. TSMC is highlighted as the best play because it manufactures chips for AMD, Nvidia, Apple, Qualcomm, and others, diversifying its exposure beyond just AI data centers. The foundry giant reported a 45% year-over-year revenue increase in July and expects to beat its updated 2026 guidance of 40% growth as it aggressively expands output for advanced nodes like 3nm and 2nm. Analysts view TSMC favorably, noting its dominant 73% foundry market share allows for pricing power, including a planned 25% price increase for AI chips next year. Currently trading at 25 times forward earnings compared to the semiconductor ETF's 67x multiple, TSMC stock has risen 76% over the past year but remains cheaper than AMD and Nvidia on a valuation basis.