Key Points
TSMC stock has delivered multibagger returns over the past three years, and the good news for investors is that it may repeat the feat.
The company's earnings are on track to grow at really impressive rates, driven by the booming demand for its advanced chip nodes.
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Taiwan Semiconductor Manufacturing (NYSE: TSM) has become a multibagger over the past three years, clocking impressive gains of almost 379% as of this writing.
The foundry specialist's remarkable rally during this period has been fueled by the rapidly growing demand for artificial intelligence (AI) chips and advanced processors used across multiple applications. TSMC's factories produce advanced chips based on small process nodes, which are both power-efficient and capable of delivering solid performance.
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Not surprisingly, the leading fabless chipmakers and consumer electronic companies turn to TSMC for their chip manufacturing. This gives the company access to multiple growth opportunities across the personal computer (PC), smartphone, data center, automotive, industrial, gaming console, and other end markets.
So, it won't be surprising to see TSMC stock rising further over the next five years. Let's see what's going to drive TSMC's growth through 2030.
Image source: TSMC.
The semiconductor market's secular growth will be a tailwind for the company
According to McKinsey, the global semiconductor market reached $775 billion in revenue in 2024. The consulting giant expects the semiconductor industry to generate $1.6 trillion in revenue in 2030 in a base-case scenario, assuming demand for AI chips turns out to be weaker than expected in the long run.
McKinsey adds that the semiconductor industry's 2030 revenue could even hit $1.8 trillion. It won't be surprising to see that number turn into reality, as the demand for AI chips isn't showing any signs of slowing down. The AI server market, for instance, is anticipated to jump by more than 4 times between 2025 and 2030, generating close to $450 billion in revenue by the end of the decade.
The demand for generative AI-capable smartphones and PCs is also poised to jump significantly over the next five years, according to various third-party estimates. These devices are going to need the advanced chips that TSMC manufactures so they can process AI workloads locally.
As TSMC is the leading foundry in the world with a market share of 72% at the end of 2025, well above the 7% share of its nearest rival, the AI-fueled growth of the semiconductor market should ensure solid long-term growth for the company.
After all, TSMC anticipates its revenue from sales of AI accelerator chips to increase at a mid-to-high 50% compound annual growth rate (CAGR) through 2029. So, there is a good chance TSMC will repeat its multibagger performance over the next five years.
Here's how much upside investors can expect from TSMC stock by 2030
Analysts have become bullish about Taiwan Semiconductor's earnings growth prospects, as shown in the following chart.
TSM EPS Estimates for Current Fiscal Year data by YCharts
The company ended 2025 with $10.65 in earnings per share. TSMC's earnings are on track to grow at a 33% CAGR through 2028, based on the consensus estimate shown in the chart. Assuming its earnings growth rate slows down to 25% in 2029 and 2030, its earnings could increase to $38.98 per share by the end of the decade.
Multiplying the projected earnings by the tech-laden Nasdaq-100 index's earnings multiple of 34 points to a stock price of $1,325 in 2030. That's just over 3.3 times TSMC's current stock price, suggesting that investors can still buy this high-flying semiconductor stock before it surges higher.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
