TSM Just Posted Record Sales. Nvidia May Be Both the Winner and the One Paying for It

Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM ) just delivered another hard-data point showing that the AI semiconductor boom remains very much alive.

TSM reported September 10 that August revenue reached NT$514.81 billion, up 53.3% year over year and 10.1% from July. Revenue for the first eight months of 2026 climbed 39.3% to NT$3.39 trillion.

That is good news for NVIDIA Corporation (NASDAQ: NVDA ), one of the largest beneficiaries of leading-edge semiconductor demand. But there is a catch. TSM's increasingly dominant foundry position also gives it pricing power over customers such as Nvidia, AMD and Broadcom. Barron's noted that concerns about TSMC's reported plans to raise chipmaking prices by as much as 10% in 2027 added to pressure on semiconductor shares despite TSM's record sales.

For Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), the bull case is unusually straightforward. AI accelerators, custom silicon and increasingly complex CPUs are consuming more leading-edge wafer capacity and advanced packaging. Record monthly revenue suggests that capacity remains valuable rather than excessive. If TSM can raise prices while keeping fabs highly utilized, incremental revenue should carry attractive economics.

The bear case is that semiconductor manufacturing remains brutally capital intensive. TSM must spend ahead of demand, execute overseas fabs, and absorb geopolitical risk while customers simultaneously search for ways to reduce dependence on a single manufacturer.

For NVIDIA Corporation (NASDAQ:NVDA), TSM's numbers are strong external validation of accelerator demand. The risk is that the semiconductor supply chain increasingly wants a larger share of the AI economics Nvidia has historically captured. Higher wafer, packaging and memory costs become especially relevant as Nvidia's gross margin normalizes from extraordinary levels.

Hedge funds became more bullish on both stocks in Q2. Insider Monkey tracked 249 hedge funds holding TSM, up from 234 in Q1. Nvidia ownership rose to 285 funds from 275. Short sellers remain relatively unconvinced that either stock is vulnerable: TSM's August 14 short interest was about 0.6% of the float and Nvidia's was roughly 1.2%.

Nvidia remains the higher-quality franchise, but TSM's record sales and pricing power mean it can collect the semiconductor equivalent of a toll from Nvidia and many of Nvidia's challengers at the same time.