This Is My Favorite Artificial Intelligence Stock to Buy Right Now (Hint: Not Nvidia, Broadcom, or Alphabet)
Jennifer Saibil, The Motley Fool
Wed, July 22, 2026 at 1:51 AM GMT+5:30
4 min read
Many top artificial intelligence (AI) stocks have underwhelmed recently. Palantir Technologies stock, for example, is down 25% so far this year, while semiconductor king Nvidia is slightly underperforming the S&P 500
Taiwan Semiconductor Manufacturing (NYSE: TSM) stock, though, is outperforming the market, up 32% year to date. Here’s why it’s my favorite AI stock to buy right now, and why the market agrees
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
The AI chipmaker’s partner
Companies like Nvidia and Broadcomdesign semiconductors, but they don’t physically produce them. They partner with Taiwan Semiconductor (TSMC), the largest chip foundry in the world. TSMC works with nearly all the world’s top tech companies, including Apple, Alphabet, and Advanced Micro Devices
According to Counterpoint Research, it controls 73% of the chip manufacturing market, and that share has increased over the past few years. Moreover, management recently addressed concerns of rising competition by noting its secret recipe of “technology, manufacturing, and customer trust.”
While competitors like Terafab and Samsung Foundry are making inroads into the business, TSMC is investing deeply in keeping its lead. On its second-quarter earnings call, it announced plans to invest another $100 billion in its Arizona foundry, bringing its total to $265 billion. While it just built its first facility there, CEO C.C. Wei said that it’s planning to open four more, in addition to opening fabs at other U.S. locations. Having its fabs located in U.S., where it can work alongside its megaclients, should be good for business.
The diversified model
Once upon a time, Taiwan Semi was briefly a Warren Buffett stock, and it fits the Buffett model in many ways. But he only held the position for a period of months before selling it. He later explained that he had made the move because, in light of the unique issues that Taiwan faces, he would prefer to invest in a company just as good as TSMC, but in the U.S
One feature of TSMC that stands out as a Buffett-stock quality — and that also makes it my favorite AI stock to buy today — is its diversified revenue base. Wei noted on the earnings call that the rise of agentic AI will be good for its business
“We believe this is positive for TSMC,” he said, “as no matter what CPU approach is taken, whether it’s x86, ARM-based, or RISC-V architecture, they are almost all TSMC’s customers.”
