nvidia He is definitely the king of Wall Street these days. As the manufacturer of high-performance graphics processing units (GPUs) that power artificial intelligence (AI) programs and large-scale language models, NVIDIA's stock price has exploded over the past three years, rising nearly 1,500%. The company currently boasts a market capitalization of $4.6 trillion, making it the world's largest company by valuation, and it seems like a rock to reach $5 trillion in no time.
Nvidia has another solid year in 2025, boasting a 41% profit, but there is another AI stock that is getting even better. This is essential to the success of Nvidia and almost every other major chip maker.
Taiwan Semiconductor Manufacturing(NYSE: TSM)well known as TSMC and is the world's largest semiconductor manufacturer. We don't design chips, but we build them in manufacturing plants for Nvidia and other customers. Broadcom, Advanced Micro Devices, apple, Teslaand more.
TSMC stock has grown 45% so far this year, breaking Nvidia's profits from the start of the year and setting a new all-time profit. It also has a ratio of revenue to price to sales, and stock prices are much more attractive than Nvidia.
TSM PE ratio data by YCHARTS
Now for the icing on the cake. Nvidia CEO love Taiwan Semiconductors and recently tilted his cap to TSMC. “They are world-class foundries and support customers with diverse needs. They can't overstate the magic that is TSMC,” Jensen Fan told reporters in September.
Image source: The Motley Fool.
Taiwan's biggest business is making chips with 3 nanometers and 5 nm. The company has earned 60% of its revenue from chip creation.
TSMC is one of several fabricators that can make a highly sought-after 3NM chip large, and that's a big deal. The smaller the transistors on the chip, the more powerful companies like Tesla and Nvidia can pack them in and make them stronger. TSMC also already has plans to mass-produce the 2NM process this year.
TSMC also uses semiconductors on smartphones, allowing 5G communication to mass audiences. 5G allows wireless users to access the internet at broadband speeds. This means you can do almost everything you need from a laptop, tablet or phone, such as streaming high-resolution video or content or working remotely.
The company acquires a portion of its revenue from Internet of Things devices, such as Smart Home products and wearable technology. It also creates chips for electric vehicles, driver assistance programs, vehicle information and entertainment systems.
Second quarter revenue was $3.07 billion, up 44.4% from a year ago, with an outstanding net profit margin of 42.7%. It is also expected to see better next quarter, where the company forecasts revenues between $31.8 billion and $33 billion.
TSMC is also expanding rapidly, investing $165 billion in creating manufacturing plants and other facilities in Arizona. This is important to help Taiwanese semiconductors isolate from tariffs and other economic headwinds as the US government aims to bring manufacturing into American soil.
If you're just picking one stock to buy now, my choice is TSMC. According to market research firm Trendforce, the company has a 70% market share in the casting market, giving it a huge moat. Considering the semiconductor industry is a $600 billion business, which is projected to reach $1 trillion per year by 2030, the market opportunity for Taiwanese semiconductors is enormous.
There are also dividends that are not often seen in AI stocks. Taiwanese semiconductor's 1.2% yield and $3.34 per share payment will not be billionaires, but it will be more burdensome than the revealing $0.04 that Nvidia pays annually.
TSMC is cheaper in stock than NVIDIA and is absolutely essential for the semiconductor and AI industry. However, if you have space in your portfolio, you will need to invest in both. TSMC and Nvidia are unstoppable, double-headed AI powerhouses that can lock any portfolio.
Consider this before purchasing inventory at Taiwan Semiconductor Manufacturing.
Motley Fool Stock Advisor The analyst team has identified what they believe 10 Best Stocks For investors to buy now…and Taiwan's semiconductor manufacturing was not one of them. The 10 stocks that have made the cut could potentially generate monster returns over the next few years.
When should you think about it? Netflix I created this list on December 17, 2004…If you invested $1,000 at the time of recommendation, There is $621,976! *Or when nvidia I created this list on April 15, 2005… If you invested $1,000 at the time of recommendation, There is $1,150,085! *
Now it's worth noting Stock Advisor The total average return rate is 1,058% – Outperformance that breaks the market compared to the 191% of the S&P 500. Don't miss the latest Top 10 list and get it when you join Stock Advisor.
View 10 shares »
*Stock Advisor will return as of September 29, 2025
Patrick Sanders has a job at Nvidia. Motley Fools introduces and recommends Advanced Micro Devices, Apple, Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. Motley Fool recommends Broadcom. Motley Fools have a disclosure policy.
This artificial intelligence (AI) stock quietly surpassed Nvidia in 2025.
