The emergence of artificial intelligence (AI) less than three years ago has triggered a fundamental transformation in the tech industry. This isn't just my opinion: The five most valuable companies globally—all boasting market capitalizations above $2 trillion—are at the forefront of AI innovation.

AI chip giant Nvidia recently claimed the title of the world's most valuable public company, reaching a valuation of $4.5 trillion (at the time of writing), as its GPUs have become the go-to hardware for AI applications. Leading enterprise and cloud provider Microsoft has expanded its AI offerings, pushing its market value to $3.9 trillion. With over a billion iPhones in use, Apple has a ready user base for its Apple Intelligence (AI) initiatives, lifting its valuation to $3.8 trillion. Alphabet and Amazon, both major players in cloud and AI, complete the top five with market caps of $2.9 trillion and $2.4 trillion, respectively.

Currently valued at about $1.5 trillion (as of this writing), Taiwan Semiconductor Manufacturing ( TSM 8.01%), commonly known as TSMC, is rapidly approaching this elite group. The relentless adoption of AI is driving unprecedented demand for its cutting-edge chips. As the largest and most respected semiconductor foundry worldwide, TSMC is well on its way to qualifying for this exclusive circle—and it may happen sooner than many investors expect.

1 Unstoppable Stock Set to Join the Ranks of Nvidia, Apple, Microsoft, Amazon, and Alphabet in the $2 Trillion Club by 2027 image 0

Image source: Taiwan Semiconductor Manufacturing.

Want chips with that?

For years, TSMC has quietly produced the most sophisticated processors, but it has recently stepped into the limelight. The company describes itself as the "world's first dedicated semiconductor foundry," making it an essential link in the supply chain for high-performance computing (HPC) and AI technologies.

And to be clear, no foundry enjoys the same reputation as TSMC. Its clientele features the biggest names in tech, including Nvidia, Arm Holdings, Advanced Micro Devices, and Apple, among others.

With the explosion in demand for processors tailored to AI, TSMC's business is no longer reliant solely on smartphone chips. In fact, the majority of its revenue now comes from advanced processors for HPC and AI, which recently made up 60% of total sales.

TSMC's expansion is picking up speed. In the second quarter, revenue soared 44% year-over-year in U.S. dollars to $30 billion, while earnings per ADR jumped 67% to $2.47. Management anticipates this momentum will persist. For the third quarter, TSMC projects revenue of $32.4 billion at the midpoint, representing 38% growth, and the company has a track record of exceeding its own forecasts.

The path to $1 trillion

As the world races to embrace this revolutionary technology, TSMC finds itself in a highly advantageous position. The company stands to gain significantly from the rise of generative AI, serving the largest tech firms as clients. TSMC's rapid revenue growth is a strong indicator that it is set to capitalize on this trend, and it is likely to join the ranks of multi-trillion-dollar companies soon.

Wall Street analysts predict TSMC will bring in $123.3 billion in revenue in 2025, resulting in a forward price-to-sales (P/S) ratio of about 12.8. If this P/S ratio holds, TSMC would need to reach approximately $156 billion in annual revenue to support a $2 trillion valuation.

Notably, Wall Street projects revenue growth of 16% in 2026 and 18% in 2027. If TSMC meets these targets, it could achieve a $2 trillion market cap as early as 2027. However, given the company's accelerating growth, it may reach this milestone even sooner.

Projections for AI's market impact keep climbing. Consulting giant McKinsey & Company estimates that generative AI could contribute between $2.6 trillion and $4.4 trillion to the global economy each year over the next decade. This may even be a conservative estimate, as new AI applications are constantly emerging.

Finally, with a forward earnings multiple of around 30, TSMC is attractively valued, offering investors a compelling way to participate in a rare, transformative opportunity.