Why Is Everyone Talking About Taiwan Semiconductor Stock? | TSM STock Deep Dive Part 2

Parkev Tatevosian, CFA•Jul 21, 2026

Summary

Parkev provides a deep dive into Taiwan Semiconductor Manufacturing Company (TSM), emphasizing that the primary driver of current interest is the company's near 100% capacity utilization. Parkev explains that TSM's manufacturing is effectively sold out, allowing the company to maintain full pricing power without offering discounts. While management expects some gross margin dilution due to the ramp-up of 2nm technology and overseas expansion, Parkev notes that TSM has historically managed to expand margins despite these headwinds through extreme efficiency.

Parkev highlights TSM's strategic response to the supply-demand imbalance, noting a significant increase in the 2026 capital expenditure budget to between $60 and $64 billion. This investment is not speculative, as Parkev points out that TSM is in close coordination with major clients to ensure future capacity is already spoken for. Parkev views TSM's growth and spending as a broader confirmation that the AI boom remains robust with no signs of slowing down.

TSM: Parkev argues that the stock is highly attractive due to the insatiable demand for its leading-edge chips, which has kept the company operating at full capacity. Parkev notes that TSM is aggressively expanding its capital expenditure to over $60 billion by 2026 to meet this excess demand. Parkev believes that the company's ability to maintain margins despite expansion costs and its critical role for companies like Nvidia and Apple makes it a central beneficiary of the ongoing AI cycle.

Mentioned Stocks

TSM

Sentiment: BUYAction: RECOMMENDED

Reasoning: Parkev highlights the insatiable demand for TSM's manufacturing, which is currently operating at nearly 100% capacity. Parkev notes that the company is raising its capital expenditure budget for 2026 to $60-$64 billion to meet this demand, signaling strong confidence in the long-term AI boom. Despite potential margin headwinds from 2nm technology and overseas expansion, Parkev argues that TSM's ability to maintain full pricing and secure long-term customer commitments makes it a core holding for AI-focused investors.

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