Nvidia CEO Jensen Huang: ‘Anybody Who Wants to Buy’ Taiwan Semiconductor Stock ‘is a Very Smart Person’

Nvidia CEO Jensen Huang strongly endorsed Taiwan Semiconductor Manufacturing Company (TSMC), highlighting its indispensable role in Nvidia's AI roadmap, including the Rubin chip and six future AI products. This vote of confidence follows TSMC's robust Q2 performance, with revenue surging 44% year-over-year to $30 billion, driven by escalating AI chip demand, and its continued technological dominance in advanced manufacturing nodes. While TSMC's global expansion, including significant U.S. investments, reinforces its market position, it anticipates a 2-3% gross margin contraction in 2025 and faces uncertainty regarding U.S. CHIPS Act subsidy terms.

Analysis

Taiwan Semiconductor Manufacturing Company (TSM) has received a powerful strategic endorsement from Nvidia CEO Jensen Huang, who highlighted TSM's indispensable role in producing Nvidia's upcoming Rubin chip and six other AI products. This validation of TSM's position at the core of the AI supply chain is substantiated by strong fundamental performance, including a 44% year-over-year revenue surge to $30 billion in Q2, with high-performance computing now constituting 60% of sales. The company's competitive moat is reinforced by its technological leadership in 3nm and 5nm nodes, a domain where competitors like Intel are reportedly facing yield challenges. Despite this positive outlook, there are defined headwinds. The stock recently broke below its 50-day moving average amid a sector-wide sell-off, though it remains up approximately 15% year-to-date. Furthermore, management anticipates a 2-3% contraction in gross margins in 2025 due to the costs of global expansion, including its $165 billion investment in Arizona. Regulatory uncertainty also persists, as TSM is reportedly contemplating the return of $6.6 billion in U.S. CHIPS Act subsidies to preserve its operational independence from government equity stakes.

Key Decisions for Investors

• Investors should weigh the powerful long-term catalyst of TSM's deepening partnership with Nvidia against the short-term technical weakness, potentially viewing the recent dip as a buying opportunity given the strong fundamental backdrop.
• Monitor the company's gross margin guidance closely, as the projected 2-3% contraction in 2025 due to overseas expansion costs could impact future profitability and valuation multiples.
• Track developments regarding the U.S. CHIPS Act subsidies, as a decision to return the $6.6 billion would signal a prioritization of independence over government funding, affecting its capital allocation strategy.
• Consider TSM's sustained technological leadership in advanced nodes as a core pillar of the investment thesis, but remain vigilant for any signs of competitors closing the manufacturing gap.