Demand for chips remains strong, raising questions on Taiwan Semiconductor valuation

Taiwan Semiconductor Manufacturing Co. just told the market it expects revenue to grow slightly more than 40% in 2026. That’s the kind of number that makes growth investors salivate and value investors reach for the antacids. The world’s largest contract chipmaker raised its guidance on the back of relentless demand for advanced AI chips, and its July 2026 sales figures backed up the optimism: NT$467.58 billion for the month, a 45% jump compared to the same period last year. But with shares trading in the $400 to $430 range and forward price-to-earnings multiples sitting around 21-22x, the question Wall Street can’t stop asking is whether all that good news is already baked into the price. The numbers behind the AI chip juggernaut The company lifted its capital expenditure guidance to between $60 billion and $64 billion, a substantial increase from earlier estimates. Most of that spending is being driven by sustained AI investment from heavyweight customers like Nvidia, who need TSMC’s most advanced manufacturing nodes to produce the GPUs powering everything from large language models to autonomous driving systems. To put TSMC’s dominance in perspective, the company commands roughl...