Taiwan Semiconductor’s $100 Billion Arizona Expansion Is a Bullish Sign for Investors

Taiwan Semiconductor Manufacturing (TSM) reported second-quarter earnings Thursday. And while the market seemed to shrug off a very solid earnings report, the company announced its plan to invest another $100 billion in its foundries in Arizona.

The declaration, made during the company’s earnings call with analysts, brings TSMC’s total investment in Arizona to $265 billion in up to 12 separate facilities.

CEO C.C. Wei told analysts that the investment would support advanced packaging fabs and the manufacturing of 2-nanometer chips, which TSMC just began selling in the second quarter.

“We believe this investment will help to further foster the development of the United States semiconductor ecosystem, strengthen the supply chain, and support an increasing number of high-tech, high-paying jobs in the United States,” he said. “At the same time, we are building 13 leading-edge and advanced packaging fab in Taiwan over the next several years, and we will continue to further invest in Taiwan. Therefore, TSMC's semiconductor technology and manufacturing will continue to play a pivotal role in supporting the global semiconductor industry while unleashing our customers' innovations.”

Let’s take a closer look at TSMC and explore bullish reasonings about the company for 2026 and beyond.

TSMC Profits Soar in Q2

TSMC, as the company is known, is the world’s largest foundry, with the biggest part of its business geared toward making high-powered artificial intelligence chips for Nvidia Corporation (NVDA), Advanced Micro Devices (AMD), Broadcom (AVGO), and other chipmakers. TSMC has a market cap of $2.18 trillion, making it the seventh-largest company in the world by market cap.

Revenue in the second quarter was $40.2 billion, up 33.7% from a year ago and up 12% on a sequential basis. Net income was $22.36 billion, up a whopping 77.8% from a year ago.

And TSMC expects revenue growth to accelerate through the end of the year. The company called for third-quarter revenue to be in the range of $44.6 billion and $45.8 billion, which would be up 36% from a year ago. And full-year revenue is expected to grow by 40%, management said.

A key part of that revenue growth will be from TSMC’s 2 nm processes. Taiwan Semiconductor just started getting revenue for its 2 nm process in the second quarter, with industry reports suggesting wafers are about $30,000 each. TSMC disclosed that it received 3% of its revenue from 2 nm sales.

TSMC breaks its revenue by process technology, and four years ago, wafers from 2 nm and 3 nm technologies weren’t even on the market. Nearly two-thirds of TSMC’s revenue comes today from 5 nm technologies and below.

Source: TSMC

That’s why TSMC is investing another $100 billion in Arizona. The company first broke ground in the U.S. in 2021, and has been gradually increasing its investment as the U.S. government has pressured foreign manufacturers to invest in the U.S. The $100 billion investment announced Thursday would involve building four new foundries, joining six current fabs and two advanced chip packaging facilities in the Phoenix area.

Yet another tailwind is TSMC’s pricing power. TSMC reportedly has a 73% market share in the global chip market, and executives like Nvidia CEO Jensen Huang have spoken glowingly about the company, saying in 2025, “You can’t overstate the magic that is TSMC.”

Wedbush Securities wrote in an analyst note this week that TSMC could raise mature-node chip prices early in 2027. Considering the unique position that Taiwan Semiconductor holds in the market, its customers would find it very difficult to seek an alternative foundry that they would trust with advanced chip manufacturing. 

What Are Analysts Saying About TSMC Stock?

Despite the solid earnings report, investors seemed to shrug off the information, with TSMC stock down 2.32% at Thursday's COB amid broader sell-offs in the tech sector. Analysts have a rosier view, with 17 experts who cover the stock giving it a consensus “Strong Buy” rating. Thirteen recommend “Strong Buy,” two side with a “Moderate Buy,” while the remaining two give “Hold” ratings. The consensus price target of $463.92 represents potential upside of 13.2%. But a $590 Street-high price target indicates a potential for a 44% upside for the next 12 months.

TSMC could hit that upside, especially as investors realize that Q3 and Q4 revenue growth will likely accelerate from an already-solid Q2 report. The company’s 2 nm processes, combined with its reported plans to increase prices, may bode well for future profits.