NVDA vs. TSM: Which Stock Offers More Upside in Semiconductor Space?

NVIDIA Corporation NVDA and Taiwan Semiconductor Manufacturing Company TSM, also known as TSMC, are two powerhouses at the heart of the global semiconductor ecosystem. NVIDIA designs the powerful graphics processing units (GPUs) that run advanced artificial intelligence (AI) models, while Taiwan Semiconductor manufactures those chips using its leading-edge process technologies.

Both companies are benefiting from the rise of AI, but their business models, risk profiles and long-term outlooks differ. Let’s break down how each company is performing and which one looks like the better investment right now.

NVIDIA: The Core AI Winner

NVIDIA remains the backbone of the AI boom, with its GPUs powering everything from cloud data centers to self-driving vehicles. The company continues to dominate the AI infrastructure market, driven by explosive demand from cloud providers and enterprises. In the third quarter of fiscal 2026, NVIDIA’s revenues surged 62% year over year to $57 billion, while earnings per share (EPS) jumped 60% to $1.30.

NVIDIA Corporation Price, Consensus and EPS Surprise

NVIDIA Corporation price-consensus-eps-surprise-chart | NVIDIA Corporation Quote

The company’s new GPU architectures, Hopper 300 and Blackwell, are rapidly gaining adoption as customers race to expand AI capabilities. The Blackwell Ultra and upcoming Vera Rubin platforms could further cement NVIDIA’s leadership as the AI hardware race intensifies.

NVIDIA’s most powerful growth engine continues to be its Data Center business. In the third quarter of fiscal 2026, the segment generated $51.22 billion in revenues, representing 89.8% of total sales. This marked a staggering 66% year-over-year increase and 25% sequential growth.

The robust performance was mainly driven by higher shipments of the Blackwell GPU computing platforms that are used for the training and inference of large language models, recommendation engines and generative AI applications.

NVIDIA’s recent partnership with OpenAI, which involves the construction of massive AI data centers powered by NVIDIA systems, is expected to boost long-term demand for its GPUs. The deal reinforces NVIDIA’s position as the dominant supplier of AI chips worldwide.

TSM: The AI Enabler With Structural Tailwinds

Taiwan Semiconductor continues to dominate the semiconductor foundry space. TSMC is known for its advanced production capabilities and has already moved into 3nm production, with 2nm coming soon. Its large scale allows it to handle rising AI chip demand better than most competitors. The company has established itself as the preferred manufacturing partner for AI accelerators, including GPUs and custom silicon developed by major players like NVIDIA, Marvell Technology and Broadcom.

The ongoing AI boom has placed TSMC at the center of a multi-year structural growth cycle. AI-related revenues tripled in 2024 and are expected to double again in 2025. Taiwan Semiconductor’s latest earnings report highlights just how dominant the company remains. In the third quarter of 2025, TSM’s revenues surged 41% year over year to $33.1 billion, while EPS jumped 39% to $2.92.

Taiwan Semiconductor Manufacturing Company Ltd. Price, Consensus and EPS Surprise

Taiwan Semiconductor Manufacturing Company Ltd. price-consensus-eps-surprise-chart | Taiwan Semiconductor Manufacturing Company Ltd. Quote

To keep up with the growing demand for AI chips, Taiwan Semiconductor is spending aggressively. The company is set to invest between $40 billion and $42 billion in capital expenditures in 2025, far outpacing its $29.8 billion investment in 2024. The bulk of this spending, around 70%, is focused on advanced manufacturing processes, ensuring TSMC stays ahead of other chip manufacturing rivals.

Despite its strengths, Taiwan Semiconductor witnesses near-term hurdles. Escalating geopolitical tensions, particularly U.S.-China relations, pose strategic risks. With significant revenue exposure to China, Taiwan Semiconductor is vulnerable to export restrictions, supply-chain disruptions or further regulatory pressure. These uncertainties could weigh on near-term performance.

The company’s global expansion strategy adds further strain. New fabs in the United States (Arizona), Japan and Germany are vital for geopolitical risk mitigation, but they come with higher costs. These facilities are expected to drag down gross margins by 2-3 percentage points annually over the next three to five years due to higher labor and energy costs, along with lower utilization rates in the early stages.

NVDA vs. TSM: Which Has the Stronger Growth Outlook?

Both companies will benefit from the surging demand for AI chips, but NVIDIA’s growth profile appears stronger in the near term. The Zacks Consensus Estimate for NVDA’s current fiscal-year 2026 revenues and earnings per share (EPS) indicates a year-over-year surge of 57.9% and 50.8%, respectively. For fiscal 2027, the top and bottom lines are projected to grow 36.1% and 43.9%, respectively.

By contrast, Taiwan Semiconductor’s 2025 estimates point to more modest 33.7% revenue growth and a 44% EPS increase. For 2026, the top and bottom lines are projected to rise 20.6% and 20.2%, respectively.

While TSMC’s trajectory is promising, NVIDIA continues to capture a larger share of the AI hardware spend, particularly from hyperscalers and enterprise clients, which are investing heavily in generative AI infrastructure.

NVDA vs. TSM: Price Performance & Valuation Check

Shares of NVIDIA and Taiwan Semiconductor have performed well so far in 2025 despite severe market volatility due to macro uncertainty and geopolitical tension. NVIDIA shares have risen 34.5% year to date, while Taiwan Semiconductor has soared 40.5%.