As doubts swirl around the valuation of artificial intelligence (AI) stocks, NVIDIA (NVDA) shareholders are searching for positive catalysts. All eyes are on the company’s upcoming earnings report, scheduled for February 25th. Despite NVIDIA’s monumental long-term performance, its stock has been relatively flat this year, gaining only about 4.3% over the past six months.
A key supplier may have just provided the spark investors were looking for. Taiwan Semiconductor Manufacturing Company (TSM), the world’s leading advanced chipmaker and primary manufacturer of NVIDIA’s AI processors, announced record-breaking monthly sales for January 2026. Revenue reached NT$401.26 billion (approximately US$12.7 billion), soaring 37% year-over-year and 20% month-over-month. This performance, well above historical trends, propelled TSMC’s stock to an all-time high.
TSMC’s stellar results are widely seen as a leading indicator for the AI chip sector. While the foundry giant also produces semiconductors for other companies like AMD, Broadcom, and Qualcomm, its robust growth strongly suggests sustained, high demand for the advanced chips that power AI applications—a market where NVIDIA holds a dominant position.
This positive signal is not isolated. Analysts at UBS recently highlighted that January export data for “Automatic Data Processing Equipment” from TSMC’s home region rose 8% from December—a month that typically sees a sequential decline. Furthermore, fourth-quarter exports in this category grew 25% over the third quarter. This macro data provides a favorable backdrop for NVIDIA, especially as UBS projects an 18% quarterly growth for NVIDIA’s all-important Data Center segment for the same period.
The AI boom that began roughly three years ago is now facing investor skepticism, with concerns that hype has outpaced reality. TSMC’s monthly sales reports serve as a critical barometer for underlying demand. The latest record figures offer compelling evidence that the appetite for AI computing power is not waning but accelerating.
TSMC’s blockbuster January follows a strong fourth-quarter 2025 earnings report, where revenue of $33.7 billion grew 26% year-over-year, exceeding expectations. Management noted that High-Performance Computing (HPC) chips, the category encompassing AI processors, are now its largest revenue driver, accounting for 58% of 2025 sales. To keep pace, TSMC plans to increase capital expenditure to as much as $56 billion in 2026, with 70% to 80% allocated for advanced manufacturing technologies.
While TSMC’s performance doesn’t guarantee a blowout quarter for NVIDIA, and market reactions are always unpredictable, it creates a decidedly optimistic setup ahead of NVIDIA’s Q4 FY2026 earnings. NVIDIA’s stock, though up ~42% over the past year and over 1,167% in five years, has seen its valuation moderate significantly. It now trades at less than 25 times forward earnings, a discount to its five-year historical average of around 35x.
For investors, this combination—strong upstream demand signals from its primary foundry and a historically lower valuation—may present a favorable context. TSMC’s record month delivers the clearest message yet: the unprecedented demand fueling the AI revolution continues to gain momentum.
