Nvidia (NASDAQ:NVDA | NVDA Price Prediction) CEO Jensen Huang made a $1 trillion forecast this March during the company’s GTC 2026 conference. During his keynote, Huang projected that cumulative demand for Nvidia’s Blackwell and Vera Rubin chip architectures would reach “at least $1 trillion” through the end of 2027. This was a doubling of his prior estimate, where he pegged the cumulative demand at $500 billion through 2026.
The market would’ve reacted euphorically to such numbers a year back, but analysts are instead scrutinizing it, and NVDA stock hasn’t moved much. Regardless, this is a real figure that refers to cumulative Blackwell and Vera Rubin orders across the industry. Hyperscalers are doubling down on their AI spending, and they don’t seem to be winding down on their AI plans anytime soon.
By default, you likely have concluded that the biggest beneficiary is Nvidia. However, I’ll argue the true beneficiary is Taiwan Semiconductor (NYSE:TSM).
TSM is still my top bet, especially after Huang’s forecast
Every single chip that flows through Nvidia to the end customer first has to be manufactured somewhere. Taiwan Semiconductor is where these chips are manufactured using Nvidia’s designs. Hence, TSM holds massive sway over the entire AI industry.
My rationale as to why TSM will benefit more than Nvidia stems from my seeing more competition than what Nvidia’s CEO expects. That cumulative demand forecast “through the end of 2027” likely expects Nvidia to continue to have a stranglehold on the entire AI GPU market. But what if that no longer remains the case?
We are already seeing hyperscalers and AI companies trying to reduce their reliance on Nvidia prematurely, even if it means going for hardware that may be a little inferior.
You’re likely aware of Anthropic signing a deal with Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) to access a staggering 1 million TPU chips. It’s likely that other AI companies are already diversifying, and we could see several more deals like this by the end of 2027.
Who’s making these TPU chips? TSMC.
Buying TSM stock is basically casting a wide net across the whole AI chip industry. This company benefits no matter who wins out in this AI race in the end.
The market is coming to realize Taiwan Semiconductor’s importance
TSM stock has underperformed against fabless AI semiconductor stocks like NVDA stock and AMD (NASDAQ:AMD) stock early on. We’re looking at a complete inversion of that in the past few months, as TSM stock has kept on climbing. On the other hand, these fabless AI stocks are trading sideways or starting to correct.
TSM stock is up 25% in the past six months. NVDA is flat. AMD is up 35%, but most of that is due to a surge in early October. After October 2025, AMD’s stock is actually down 7.6%. Broadcom (NASDAQ:AVGO) is down nearly 5% in the past six months.
TSM is the only big chip stock that has gained significantly and is continuing to climb despite the rest of the AI industry treading water.
And TSM stock is still cheap
Many would make the inverse argument that TSM’s climb is exactly why you shouldn’t buy it. After all, the sideways trend of stocks like Nvidia has allowed for their financials to catch up. The rapid growth rate has pushed Nvidia’s forward PE ratio to just 21 times. That’s an exceedingly cheap number for a company in the hypergrowth stage.
Unfortunately for the bears, TSM is not far behind either. It trades at less than 25 times forward earnings. This is actually lower than the median semiconductor stock, which trades at 28 times forward earnings.
Now, as it pertains to growth, TSM is more expensive. The coming years are expected to see 25.6% annual revenue growth, whereas many other AI stocks are looking at 40-50% annual revenue growth.
The sacrifice you’re making in near-term growth is made up for by the fact that you have a company that is almost guaranteed to win as long as the AI narrative succeeds. Your growth visibility is measured in decades. The gap between Taiwan Semiconductor and any competitor is massive and cannot be bridged in years.
The same cannot be said for a company like Nvidia, which could very well see its dominance slip in as little as 5 years.
All things considered, I see TSM stock as a solid buy in this environment.
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