1 Company You’ve Probably Never Visited But Touch Every Day

At first glance, TSMC might look like just another chipmaker. But that’s like calling Lamborghini just another car company. TSMC doesn’t design chips, it builds them, using some of the most advanced manufacturing technology in existence.

TSM’s fabrication facilities, or “fabs,” can etch transistors smaller than viruses onto silicon wafers. That’s not hyperbole; its most advanced chips feature transistors just 3 nanometers wide. For context, a red blood cell is about 7,000 nanometers.

This extreme precision is why nearly every tech titan from Nvidia and AMD to Apple and even Amazon’s AWS depends on TSMC to manufacture their most advanced chips. When Nvidia needs to mass-produce the brains behind its AI supercomputers, it doesn’t call Intel. It calls TSMC.

Key Points

• AI-related revenue is expected to double in 2025 and grow 40% annually through 2029.

• With $70B+ in revenue and $30B+ in annual reinvestment, TSMC’s dominance fuels a flywheel of innovation that’s nearly impossible to disrupt.

• TSMC trades at under 22x forward earnings, likely prompting Stanley Druckenmiller to make it a top holding.

A Flywheel That Feeds Itself

TSMC is more than just the world’s largest chip foundry. It’s a company in a virtuous loop. Because it dominates the high-performance chip market, it rakes in massive revenue—north of $70 billion last year. That cash is reinvested into R&D and next-gen fabs, which cements its lead and attracts even more business.

To put it into perspective: TSMC’s capital expenditures in 2024 were over $30 billion—more than the annual revenue of General Mills, Delta Airlines, or Spotify. That sheer financial firepower helps ensure it stays at the bleeding edge, where only a handful of players can even dream of competing.

But it’s not all smooth sailing.

TSMC Is a High-Stakes Business

Running the most advanced fabs on Earth comes at a cost. These are not “set-it-and-forget-it” machines. Even if demand drops, TSMC is still on the hook for maintaining multimillion-dollar equipment that requires clean rooms more sterile than an operating theater. And with the chip business being notoriously cyclical, investors must be prepared for some bumps.

Then there’s the geopolitical elephant in the room: Taiwan. TSMC’s headquarters and most of its fabs are located very close to China. With that said, management is actively diversifying and building multi-billion-dollar fabs in the U.S., Japan, and Germany, moves that open the door to subsidies from governments eager to secure their own chip supply.

Here Comes the AI Tsunami

Now for the part that has investors like Stanley Druckenmiller taking notice, the AI boom.

While AI has dominated headlines, what’s less known is how much of the boom flows straight through TSMC’s order books. Management expects revenue from AI-related chips to double in 2025, and management believes those sales could compound at nearly 40% annually through 2029. That’s not just good, but lights-out growth.

Overall, TSMC is guiding for 20% compound annual growth across the entire business. That’s coming off a base where revenue surged 43% year-over-year through just the first four months of 2025.

And yet, despite all this momentum, the stock still trades at a surprisingly modest valuation less than 22 times forward earnings. For a company with margins rivaling software businesses and growth projections that could outpace the S&P 500 for years, that’s rare air.

Druckenmiller Just Made It One of His Biggest Bets

Hedge fund titan Stanley Druckenmiller started buying TSMC last year. But in Q1 2025, he went big, quintupling his position to over $100 million and making it one of the largest holdings in his portfolio.

That’s not just a toe-dip. It’s a conviction buy. And it’s happening at a time when the stock is still trading around the same level it started the year.

For retail investors wondering where the next compounding opportunity might be hiding in plain sight, TSMC offers a compelling case. Yes, there are China-Taiwan risks at play. Yes, the business is capital-intensive. But it also sits at the epicenter of everything from AI to smartphones to self-driving cars.

And if Druckenmiller is right, this chip giant may well turn out to be one of the biggest winners of the AI decade.