Taiwan Semiconductor's gross margin has climbed to a new company record, and Motley Fool contributor Keithen Drury argues the move sets up shares for a fresh all-time high. TSM rose 2.19% to $438.29, putting its market cap at $2.2 trillion.
Taiwan Semiconductor Manufacturing's gross margin has reached a new company record, and Motley Fool contributor Keithen Drury argues the chip foundry's stock is now positioned to hit a fresh all-time high. Shares of Taiwan Semiconductor (NYSE: TSM) rose 2.19%, or $9.38, to $438.29, pushing the company's market cap to $2.2 trillion.
A record margin reshapes the valuation case
Taiwan Semiconductor's gross margin climbed to 63.08%, an all-time high, as its dominant position in chip manufacturing lets it charge a premium for its services. According to Motley Fool contributor Keithen Drury, the wider margin lets Taiwan Semiconductor "make a greater profit on each dollar that comes through the door". As a result, Drury argues that some of the company's historical valuation benchmarks no longer apply, since the stronger margin profile makes for a better business than before.
TSMC's grip on AI chipmaking
None of the AI hyperscalers or the companies that supply them with computing hardware manufacture their own chips — instead, they route that work to foundries like Taiwan Semiconductor. Research by The Motley Fool shows Taiwan Semiconductor accounted for over 70% of global chip fabrication revenue at the end of 2025. Even if a major client wanted to switch away, Drury notes, few rivals could match the company's manufacturing capacity.
Drury sees room for a new high
Drury points out that Taiwan Semiconductor's stock has often traded at nearly 30 times forward earnings before the year is over, which he argues leaves room for upside given the record margin. The stock's 52-week range runs from $241.62 to $479.00, with shares still below that high. Drury frames Taiwan Semiconductor as one of the biggest beneficiaries of the AI build-out, adding that its stock price will follow the business's positive momentum.
Source: The Motley Fool
Trading involves risk.
Risk Disclaimer
