This article first appeared on GuruFocus.
Oct 13 – Taiwan Semiconductor (NYSE:TSM) continues to dominate headlines as its stock slices through new all-time highs, fueled by powerful waves of AI demand. In just a 6 month, the chip giant delivered nearly 80% total return, outpacing the S&P 500 by more than 20%. A jolt came last Friday: news of Trump’s threat of a 100% tariff on China triggered a 6% pullback, though underlying momentum in AI spending still looks firm.
Hyperscale cloud players continue locking in deals to expand data center capacity ahead of demand. Oracle (NYSE:ORCL) saw its stock jump over 20% recently, backed by explosive year-over-year growth in multicloud database bookings. Its partnerships with Microsoft, Amazon (AMZN), and Google (NASDAQ:GOOGL) have powered that surge.
Meanwhile, a major pivot in chip supply is likely underway. AMD (AMD) has inked a significant multi-year AI chip contract with OpenAI, agreed to supply about 6 gigawatts of capacity starting 2026, and granted OpenAI the option to acquire up to 10% of its shares. That deal reverberated across the sector, as AI buyers increasingly diversify beyond Nvidia (NASDAQ:NVDA). NVDA, in turn, earlier struck a $100 billion partnership with OpenAI to help build AI infrastructure at scale.
TSM sits at the fulcrum of this shift: while chip designers like NVDA and AMD lean into R&D and architecture, they depend heavily on TSM for fabrication. Though Intel (NASDAQ:INTC) may try to reenter the race in the long term, its execution gaps leave it playing catch-up for now.
With that perspective, the TSM FY2026 appears to be very strong due to a number of mega deals with leading chip manufacturers and cloud technology companies. The volatility in the near term could be due to trade-war headlines but the broad AI tailwinds are likely to keep pushing the demand. As market mood might waver, TSM remains at the centre of the next layer of AI infrastructure development due to its fundamental positioning in terms of chip design as well as manufacturing.