Nvidia and Taiwan Semiconductor Manufacturing Company (TSMC) have become the twin pillars of the AI hardware boom. One designs the world’s most sought‑after AI chips; the other manufactures those chips – and many rivals’ – on the most advanced production lines on Earth.
Over the past three years, Nvidia’s share price has surged more than 900%, while TSMC is up roughly 250%. [1] With both now worth more than a trillion dollars and central to the AI “supercycle,” investors are asking a simple but tricky question:
Between Nvidia (NVDA) and TSMC (TSM), which stock looks more attractive right now?
Below is a deep dive into the latest earnings, valuations, forecasts, and key risks as of December 5, 2025.
Quick Snapshot: Nvidia vs TSMC in December 2025
- Nvidia (NVDA)
- TSMC (TSM)
In short, Nvidia is the higher‑growth, higher‑multiple “AI engine”, while TSMC is the slightly cheaper, more diversified “picks‑and‑shovels” play on the same trend.
Different Business Models, Same AI Supercycle
Nvidia: AI platform, not “just a chip stock”
Nvidia’s core is its GPU architecture (currently Blackwell and the upcoming Rubin), but what really sets it apart is the full stack:
- High‑end data center GPUs for AI training and inference.
- NVLink networking and systems.
- CUDA and a vast software ecosystem that locks in developers.
- Strategic investments and partnerships (for example, a $2 billion stake in Synopsys to co‑develop AI‑driven chip design tools). [6]
This combination has helped Nvidia capture an estimated huge share of total AI infrastructure spending, with many analysts suggesting it controls roughly half of AI accelerator spend. [7] It is also increasingly positioning itself as a platform provider rather than a single‑product chip vendor.
TSMC: The AI manufacturing backbone
TSMC, by contrast, doesn’t design chips at all. Its value proposition is:
- Manufacturing leadership at 3 nm, 2 nm and beyond.
- Massive economies of scale, with over 70% share of the advanced contract manufacturing market. [8]
- Deep, multi‑year relationships with giants like Nvidia, Apple, AMD and emerging AI players.
TSMC is pouring money into capacity:
- 2025 capex raised to $40–42 billion, largely for cutting‑edge and AI‑focused nodes and advanced packaging such as CoWoS. [9]
- Plans for at least 15 new fabs over the next several years, including 11 new wafer fabs and four advanced packaging facilities in Taiwan to meet AI demand. [10]
- An expanded U.S. investment to $165 billion for three new fabs, two advanced packaging plants and an R&D center in Arizona – one of the largest foreign direct investments in U.S. history. [11]
In simple terms: Nvidia sells the brains of AI, while TSMC sells the ultra‑precise factories that bring those brains into existence.
Earnings Momentum: Both Are Booming, Nvidia Is Explosive
Nvidia’s Q3 FY26: AI demand still “off the charts”
On November 19, 2025, Nvidia reported record quarterly revenue of $57.0 billion for its fiscal Q3 2026 (quarter ended October 26, 2025), up 22% sequentially and 62% year over year. [12]
Key highlights:
- Data Center revenue:
- $51.2 billion, up 25% quarter‑on‑quarter and 66% year‑on‑year, now roughly 90% of total revenue. [13]
- GAAP diluted EPS: $1.30, up around 60–67% from a year ago. [14]
- Gross margins remain in the mid‑70% range on a non‑GAAP basis. [15]
CEO Jensen Huang described Blackwell AI GPU sales as “off the charts” and said cloud GPUs are effectively sold out, highlighting an ongoing “virtuous cycle of AI” as demand for both training and inference accelerates. [16]
Guidance for Q4 calls for about $65 billion in revenue, implying continued rapid growth if supply can keep up. [17]
TSMC’s Q3 2025: Record profits and higher guidance on AI strength
TSMC’s Q3 2025 results (quarter ended September 30, 2025) also showed extraordinary momentum:
- Revenue: $33.10 billion (US dollars), up 40.8% year‑on‑year and 10.1% quarter‑on‑quarter, beating expectations. [18]
- Gross margin: 59.5%, up 90 bps sequentially and well above guidance. [19]
- Net income and EPS up about 39% year over year. [20]
- Advanced nodes (7 nm and below) accounted for 74% of wafer revenue, with 3 nm alone at 23%. [21]
Most importantly, management raised 2025 full‑year revenue guidance to “close to mid‑30s percent” growth in U.S. dollar terms, explicitly citing robust AI‑related demand as a core driver. [22]
So in raw growth terms:
- Nvidia is growing faster from a higher base and commands software‑like margins.
- TSMC is growing slightly slower, but still mid‑30s% revenue growth for a manufacturing business with ~60% gross margins is exceptional.
Valuations: Premium Nvidia vs “Reasonably Priced” TSMC
Core multiples today
Based on current data:
- Nvidia (NVDA)
- TSMC (TSM)
Both are expensive vs traditional semiconductors, but Nvidia trades at a clear premium to TSMC.
Interestingly, one analysis from Simply Wall St argues that Nvidia is not as overvalued as many think relative to other high‑growth AI peers: its P/E around the mid‑40s is actually cheaper than a peer average around the high‑60s. [27]
At the same time, Simply Wall St’s fair‑value model assigns TSMC a “fair” P/E closer to 37.6x, suggesting its current ~30x multiple leaves some valuation upside if growth materializes as expected. [28]
Analyst 12‑month price targets
Consensus price targets reinforce the “premium growth vs cheaper compounder” narrative.
Nvidia (NVDA)
- StockAnalysis: average 12‑month target $248.64, implying about 37% upside from current levels. [29]
- MarketBeat: average target $258.65, for roughly 42% upside from around $181.6. [30]
- Other outlets like 24/7 Wall St and Morgan Stanley highlight targets in the low‑ to mid‑$230s and above, still suggesting high‑20s to high‑30s gains over the next year. [31]
Across dozens of analysts, the consensus rating is a “Strong Buy.” [32]
TSMC (TSM)
- Investing.com: average 12‑month target around $341.9, implying roughly 16–20% upside from current prices. [33]
- MarketBeat: average target $371.67, suggesting about 26% upside. [34]
- StockAnalysis similarly reports an average target in the low‑to‑mid $370s, with a “Strong Buy” consensus from its smaller analyst set. [35]
- A more conservative Benzinga compilation shows an average target in the low‑$330s and labels the stock a “Hold.” [36]
Netting those together, Wall Street broadly sees:
- NVDA: higher expected upside (high‑30s to low‑40s %).
- TSM: solid but more modest upside (high‑teens to mid‑20s %).
That lines up with the intuition: Nvidia is higher risk/higher reward, TSMC somewhat steadier.
Strategic Expansions: Capacity, Moats and Optionality
Nvidia’s ecosystem and deal pipeline
Beyond pure earnings, Nvidia is making moves to entrench itself:
- Expanding its AI design tools reach via a $2B investment and multi‑year partnership with Synopsys, integrating Nvidia AI into chip design workflows. [37]
- Announcing a headline‑grabbing, but still tentative, $100 billion AI infrastructure letter of intent with OpenAI, aimed at building GPU‑rich data center capacity. Nvidia has clarified this is not yet a finalized agreement, but it illustrates the scale of potential demand. [38]
- Deepening ties with big customers like Foxconn and other server vendors, with recent reports that Foxconn’s AI‑server‑driven revenue growth points to continued strong demand for Nvidia chips. [39]
On top of that, Nvidia’s CUDA software platform and AI frameworks create high switching costs and a durable moat that doesn’t show up in physical capacity numbers.
TSMC’s global fab build‑out
TSMC is executing a historic, geographically diversified expansion:
- Capex $40–42B in 2025, up from prior plans, driven heavily by AI chips and advanced packaging. [40]
- Nine production facilities (eight fabs + one packaging plant) coming online or under construction across Taiwan, Arizona, Japan and Germany in 2025 alone. [41]
- At least 15 new fabs over the next several years, with 11 wafer fabs and four packaging facilities in Taiwan, as AI chip demand remains intense. [42]
- U.S. investment scaled to $165B, with three new high‑end fabs and advanced packaging plants geared for next‑gen AI chips (including Nvidia’s Blackwell line) in Arizona. [43]
Crucially, TSMC has also said it will accelerate 2‑nm production plans in Arizona to meet strong AI demand from U.S. customers, signaling that a meaningful slice of bleeding‑edge capacity will sit outside Taiwan. [44]
For investors, this global build‑out does two things:
- Reduces (but doesn’t eliminate) geopolitical risk by diversifying production away from Taiwan.
- Locks in TSMC as the default manufacturer for advanced AI chips across multiple customers and geographies.
Key Risks: Customer Concentration vs Geopolitics
Nvidia risks
- Customer concentration & custom chips
Recent analysis shows that four hyperscalers (very likely Microsoft, Meta, Amazon and Alphabet) account for around 61% of Nvidia’s revenue – and all four are working on their own AI accelerators to reduce dependence on Nvidia. [45]- If even one of these giants slows GPU purchases or shifts more workloads to in‑house chips, Nvidia’s growth trajectory could cool quickly.
- Regulatory and export risks
Export controls on advanced AI chips to China remain a headwind. Nvidia’s management has repeatedly highlighted their desire to keep selling to China, but new restrictions continue to evolve and could constrain a large market. [46] - AI “overshoot” and valuation volatility
There is ongoing debate about an AI stock bubble. SK Group’s chairman recently argued that AI itself isn’t in a bubble, but AI stocks might see a correction after an “excessive” rise in valuations – noting examples like SK Hynix’s 214% one‑year rally providing memory chips for Nvidia. [47] - Circular investment and project‑risk concerns
Regulators and commentators have also raised eyebrows at patterns where Nvidia invests in AI startups that then become large Nvidia customers, and at massive, long‑dated commitments like the tentative OpenAI deal. [48]
Nvidia could continue to crush expectations, but its stock is priced for very high sustained growth – any disappointment can lead to sharp drawdowns.
TSMC risks
- Geopolitical exposure
TSMC’s single biggest risk isn’t business‑related but political: a serious escalation in Taiwan–China tensionscould disrupt operations or severely impact valuations. This has been “priced in” to some degree for years, but it is impossible to fully quantify. - Capex intensity and cyclicality
Spending $40–42B per year on new fabs is a big bet that AI demand stays elevated. If AI or broader semiconductor demand slows, TSMC’s returns on this capex could compress margins and drag on free cash flow. [49] - Global execution risk
Building advanced fabs in the U.S., Japan and Germany is complex and costly. TSMC has already faced safety incidents, cost overruns and schedule hiccups in some regions, though these haven’t derailed the overall expansion. [50]
Despite these risks, TSMC benefits from broad customer diversification and from being the default manufacturer for multiple AI chip makers. Even if one customer stumbles, others may fill the capacity.
What the Latest Analysis Says: Nvidia vs TSMC
Recent commentary from major outlets is actually split between the two:
- A Zacks/TradingView piece concluded that Nvidia currently offers more upside in the semiconductor space, pointing to its dominant AI hardware position, software ecosystem and faster top‑line growth as justification for its premium valuation. [51]
- Multiple articles from The Motley Fool and Nasdaq argued that TSMC may be the better AI stock on a risk‑adjusted basis, thanks to:
- Lower valuation multiples than Nvidia.
- Essential role as manufacturer for many AI players.
- Strong projected EPS growth (around 40% in 2025, then double‑digit in 2026). [52]
- A fresh comparison piece (“Nvidia vs TSMC: Which AI Stock Holds the Edge Right Now”) notes that both trade at similar multiples on 2026 earnings estimates, but highlights Nvidia’s higher upside and greater downside risk from customer concentration, while TSMC looks more stable with lower volatility and a broader customer base. [53]
In other words, even professional analysts don’t fully agree – which is exactly why this is an active debate.
Nvidia vs TSMC: Which Stock Looks More Compelling Now?
If you want maximum AI torque and can stomach volatility…
- Nvidia is still the purest, most leveraged play on AI infrastructure:
The flip side: you’re paying a premium multiple, heavily exposed to hyperscaler spending cycles, regulatory shifts and any sudden reassessment of AI ROI.
If you want steadier exposure to AI with a valuation cushion…
- TSMC increasingly looks like the “boring winner” of the AI era:
- Still‑strong revenue growth (mid‑30s % expected for 2025) with very high margins for a manufacturer. [56]
- A broader customer base, making it less dependent on any single AI platform’s success.
- Lower valuation (around 30x trailing earnings vs Nvidia’s mid‑40s) and solid dividend income. [57]
- Consensus upside in the high‑teens to mid‑20s range, with several analysts calling it one of the best non‑Nvidia AI bets. [58]
The major risk is geopolitical, which no spreadsheet can fully capture.
How to Think About NVDA vs TSM for Different Styles of Investors
Not investment advice – just frameworks. Always do your own research or consult a licensed financial advisor for personal decisions.
- Growth‑oriented, high‑risk investors
- Likely to lean toward Nvidia, accepting volatility and concentration risk for the chance of outsized gains if AI spending continues to surprise on the upside.
- Long‑term compounders and “picks‑and‑shovels” fans
- May prefer TSMC, viewing it as a somewhat cheaper, diversified way to benefit from AI, smartphones, automotive, and industrial chips – with AI packaging and 2‑nm capacity as key upside drivers.
- Diversified AI basket approach
- Many investors may choose both, using Nvidia as the “engine” and TSMC as the “infrastructure” layer, thereby participating in AI demand whether Nvidia, AMD, Apple or a new entrant wins specific workloads.
Bottom Line
- Nvidia (NVDA) is still the unrivaled AI GPU leader, growing faster with a richer software moat, but priced at a premium and carrying customer‑ and regulation‑related risks.
- TSMC (TSM) is the indispensable manufacturing backbone of the AI world, expanding capacity massively, trading at lower multiples, and arguably offering a smoother ride – geopolitical wildcards aside.
In December 2025, the market is effectively saying:
- “We’re willing to pay up for Nvidia’s extraordinary AI growth story,” and
- “We’ll pay a bit less for TSMC, but acknowledge its central role in making nearly every advanced AI chip.”
Which one is “better” depends less on the story and more on your time horizon, risk tolerance and portfolio mix.
References
1. watcher.guru, 2. stockanalysis.com, 3. www.macrotrends.net, 4. companiesmarketcap.com, 5. www.macrotrends.net, 6. www.reuters.com, 7. www.investing.com, 8. watcher.guru, 9. www.trendforce.com, 10. www.datacenterdynamics.com, 11. pr.tsmc.com, 12. nvidianews.nvidia.com, 13. nvidianews.nvidia.com, 14. rogermontgomery.com, 15. rogermontgomery.com, 16. nvidianews.nvidia.com, 17. www.theverge.com, 18. opendatascience.com, 19. pr.tsmc.com, 20. pr.tsmc.com, 21. pr.tsmc.com, 22. www.manufacturingdive.com, 23. www.macrotrends.net, 24. www.morningstar.com, 25. www.macrotrends.net, 26. www.morningstar.com, 27. simplywall.st, 28. simplywall.st, 29. stockanalysis.com, 30. www.marketbeat.com, 31. 247wallst.com, 32. stockanalysis.com, 33. www.investing.com, 34. www.marketbeat.com, 35. stockanalysis.com, 36. www.benzinga.com, 37. www.reuters.com, 38. www.techradar.com, 39. www.barrons.com, 40. www.trendforce.com, 41. www.notebookcheck.net, 42. www.datacenterdynamics.com, 43. pr.tsmc.com, 44. www.tomshardware.com, 45. watcher.guru, 46. www.investopedia.com, 47. www.reuters.com, 48. www.techradar.com, 49. www.tomshardware.com, 50. www.datacenterdynamics.com, 51. www.tradingview.com, 52. www.fool.com, 53. watcher.guru, 54. nvidianews.nvidia.com, 55. www.marketbeat.com, 56. www.reuters.com, 57. www.macrotrends.net, 58. www.investing.com
