Taiwan Semiconductor Just Set a New Company Record. A New All-Time High Stock Price Is Coming
Key Points
Taiwan Semiconductor's gross margin just reached a new all-time high.
TSMC's profits will continue soaring over the next few years thanks to AI.
Watching company trends is a key part of investing in a stock. When a company creates a new business or sets new records, it completely changes how investors should analyze it, as the company of today is not the same as the one from five years ago. This can affect what a fair valuation is, which could lead to a soaring stock price.
One company that fits this description is Taiwan Semiconductor Manufacturing (NYSE: TSM). It recently set new company records in its margin profile, and I think that primes the stock to set new all-time highs in the near future.
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Taiwan Semiconductor is thriving in the AI build-out
Taiwan Semiconductor holds an important position in the artificial intelligence boom. None of the AI hyperscalers or the companies that provide them with computing units manufactures their own chips. Instead, they farm that work out to chip foundries like Taiwan Semiconductor. Taiwan Semiconductor is the world's largest chip foundry and has leading technology.
In fact, research by The Motley Fool shows that at the end of 2025, Taiwan Semiconductor accounted for over 70% of global chip fabrication revenue.
Even if some of TSMC's major clients wanted to switch away from it, they'd have a hard time finding another chip fabricator with capacity that matches what Taiwan Semiconductor offers. As a result, it's well-positioned to thrive in the AI build-out.
Its position has also allowed Taiwan Semiconductor to charge a premium for its services, causing its gross profit margin to soar to new all-time highs.
TSM Gross Profit Margin (Quarterly) data by YCharts
This allows Taiwan Semiconductor to make a greater profit on each dollar that comes through the door, which is why its profit margins have also reached new levels.
TSM Profit Margin (Quarterly) data by YCharts
As a result, I'd argue that some of Taiwan Semiconductor's historical valuations no longer apply, as its new profit margin makes for a far better business that should trade at a premium valuation compared to others in the industry. However, that's not what I'm seeing, as the stock isn't priced at a particularly high premium.
TSM PE Ratio (Forward) data by YCharts
With Taiwan Semiconductor's stock often trading at nearly 30 times forward earnings before the year is over, there's plenty of room for upside, which could lead to a new all-time high.
Taiwan Semiconductor is one of the biggest beneficiaries of the AI build-out. It's already having a positive impact on its business, and the stock price will follow closely behind. As a result, Taiwan Semiconductor is a no-brainer buy right now.
Keithen Drury has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.