<div id="readability-page-1">Few companies dominate their industry like Taiwan Semiconductor Manufacturing (TSM -0.63%) (TSMC) does in the semiconductor (chip) space, and Wall Street has taken notice. Through July 25, TSMC's stock is up close to 22% in 2025, while the S&amp;P 500 index is up around 9%. TSMC has been a vital piece of the tech world for years, supplying chips to top companies that power everything from smartphones to electric vehicles to gaming consoles to data centers. That has made TSMC a stock market darling for quite some time, but Wall Street's recent obsession with the stock comes down to one thing: artificial intelligence (AI). Some don't see TSMC as a traditional AI stock, but its role in the AI pipeline is one of the more important. It's essentially the supplier for the advanced AI chips that are critical for training, deploying, and scaling AI models. Without TSMC's chips, the AI world as we know it today would be much less advanced. <div><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MjY2ODEvdGFpd2FuLXNlbWljb25kdWN0b3ItdHNtYy1idWlsZGluZy13aXRoLXRzbWMtbG9nby1pbi1mcm9udF90c21jLmpwZyZ3PTcwMA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="420" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MjY2ODEvdGFpd2FuLXNlbWljb25kdWN0b3ItdHNtYy1idWlsZGluZy13aXRoLXRzbWMtbG9nby1pbi1mcm9udF90c21jLmpwZyZ3PTcwMA"/>Image source: TSMC. </div> TSMC's AI chip dominance has begun reflecting in its financials, too. In the second quarter, TSMC reported a record $30 billion in revenue (up 44% year over year), with high-power computing (which includes AI chips) accounting for 60% of it. <img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/c3ffbb0806c62a64693fab2dab7f788f.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="441" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/c3ffbb0806c62a64693fab2dab7f788f.png"/> TSM Revenue (Quarterly) data by YCharts There's no doubt that AI adoption is rapidly growing. With TSMC's chips being the foundation that will make this adoption possible, the company is well positioned to continue its impressive revenue growth. The company projected its AI accelerator revenue to produce a compound annual growth rate (CAGR) in the mid-40% range from 2024 until 2029, and it's well on its way to accomplishing this. </div>

1 Reason Wall Street Is Obsessed With Taiwan Semiconductor Manufacturing

- Taiwan Semiconductor Manufacturing Company (TSMC) dominates the semiconductor industry, with its stock rising nearly 22% in 2025, outperforming the S&P 500's 9% increase.  
- TSMC plays a crucial role in supplying advanced AI chips, which are essential for the development and scaling of AI technologies, contributing to a record $30 billion in revenue in the second quarter.  
- The company anticipates a compound annual growth rate (CAGR) of mid-40% for its AI accelerator revenue from 2024 to 2029, indicating strong future growth potential.  