TSMC and Nvidia Project Decadal Growth from AI Expansion

Taiwan Semiconductor Manufacturing Company (TSMC) and Nvidia are positioning for long-term growth through the expansion of artificial intelligence and agentic AI. TSMC has commenced mass production of 2nm chips using nanosheet Gate-All-Around transistors, with Apple booking nearly half of the initial capacity for the iPhone 18. The company reported a 41% revenue increase in the first quarter of 2026, reaching nearly $36 billion and achieving record gross margins of 66.2%.

Following these results, TSMC management raised its long-term gross margin floor from 53% to 56%. The company currently manufactures approximately 90% of the world's advanced processors and 68% of all processors.

Nvidia continues to dominate the sector with an 86% share of AI revenue in data centers, reporting a 140% increase in net income per share in its most recent quarter. The company attributes this surge to the rise of agentic AI and a parabolic increase in compute demand. Despite the growth, analysts highlight risks for TSMC, including a valuation near a 10-year peak and the geopolitical vulnerability of concentrating over 90% of advanced node capacity within Taiwan.