TSMC (TSM) Stock Jumps as NVIDIA CEO Says Capacity Must Double for AI Boom

TLDR

• TSMC stock climbed 1.8% to $355 Monday as U.S. officials planned exemptions for Big Tech chips from upcoming tariffs, reducing risk for the chipmaker’s major customers.
• NVIDIA CEO Jensen Huang said TSMC likely needs to double its production capacity to meet surging AI demand, signaling strong future orders but requiring heavy investment.
• The company raised its quarterly dividend to $0.9678 per share (1.1% yield) and reported January 2026 revenue of TWD 401.255 billion, up 36.8% year-over-year.
• Analysts remain bullish with multiple recent upgrades and an average price target of $381.67, implying upside from current levels.
• Taiwan pushed back on U.S. demands to shift 40% of chip production to America, creating potential geopolitical friction despite TSMC’s Arizona expansion plans.

TSMC shares rose 1.8% to $355.28 Monday as investors welcomed news that could reshape the company’s near-term outlook. Trading volume reached 14.5 million shares, slightly below the typical session average.

Taiwan Semiconductor Manufacturing Company Limited, TSM

The rally came as U.S. officials announced plans to carve out Big Tech chips from the next round of tariffs. The exemptions would be tied to TSMC’s U.S. investment commitments, reducing tariff exposure for the chipmaker’s largest customers like Apple and NVIDIA.

This policy shift removes a cloud of uncertainty that had hung over TSMC’s customer relationships. The company operates the world’s most advanced chip foundries and supplies nearly every major tech giant.

NVIDIA CEO Jensen Huang added fuel to the bullish case with stark comments about capacity needs. Huang warned TSMC would likely need to double its manufacturing capacity to keep pace with AI chip demand.

The statement signals sustained order flow for years to come. But it also implies TSMC faces a multi-year period of heavy capital spending to build out new fabs.

Strong Financial Performance Backs Up Growth Story

TSMC reported January 2026 revenue of TWD 401.255 billion, marking a 36.8% jump from the prior year. Month-over-month revenue climbed 19.8%, showing acceleration into the new year.

The company also sweetened returns for shareholders by raising its quarterly dividend to $0.9678 per share. That represents a 1.1% annual yield and marks an increase from the previous $0.83 quarterly payout.

Wall Street analysts have taken notice. Needham raised its price target from $360 to $410 with a buy rating in mid-January. Freedom Capital upgraded shares to strong-buy around the same time.

The consensus price target across analysts sits at $381.67. That implies roughly 7% upside from Monday’s closing price.

Three analysts rate the stock a strong buy, nine have buy ratings, and just one maintains a hold. The stock trades at a P/E ratio of 33.36, below many high-growth tech names.

Arizona Expansion Meets Political Headwinds

TSMC continues expanding its Arizona manufacturing presence to diversify production away from Taiwan. The move addresses customer concerns about geopolitical risk and qualifies TSMC for U.S. semiconductor subsidies.

But Taiwanese officials recently pushed back hard on U.S. pressure to shift 40% of chip production stateside. Officials called such demands “impossible,” creating tension in what had appeared to be a smooth partnership.

The resistance introduces fresh uncertainty around how quickly TSMC can scale U.S. operations. It also raises questions about whether subsidy terms might change if the company doesn’t meet American policymakers’ expectations.

Institutional investors appear unfazed for now. Jennison Associates boosted its stake by 26.7% in the second quarter, now holding 12 million shares worth $2.7 billion.

Brown Advisory increased its position by 43.2% to 6.65 million shares. Arrowstreet Capital more than doubled its holdings to 3.5 million shares.

The stock has climbed 69% over the past year. TSMC maintains a market cap of $1.84 trillion with a debt-to-equity ratio of just 0.19, giving it financial flexibility to fund expansion.

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