Quick Read
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Microsoft and TSMC are both Buys: MSFT trades at P/E 28 despite Azure’s 43% growth, while TSMC’s net income surged 77% last quarter.
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AMD’s trailing P/E of 124 after a 119% year-to-date rally signals the stock has already front-run years of Helios gigawatt execution.
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Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn’t make the cut. Grab the names FREE today.
Grading the AI buildout’s three load-bearing names at current prices: Microsoft (NASDAQ:MSFT) at $502.03 is a buy, Taiwan Semiconductor Manufacturing (NYSE:TSM) at $421.97 is a buy, and AMD (NASDAQ:AMD) at $467.42 is a hold.
Each occupies a different layer of the AI stack: hyperscale cloud, leading-edge foundry, and merchant accelerators. Their valuations reflect very different assumptions about how the buildout resolves.
Microsoft: Cash Flow Meets Copilot Scale
Microsoft’s Q4 FY26 delivered revenue of $90.01 billion, up 17.8%, with Azure growing 43% and clearing $100 billion in annual revenue for the first time. Commercial RPO of $678 billion, up 84%, is the tell: this is contracted future revenue with high visibility.
Microsoft 365 Copilot passed 30 million paid seats, with Satya Nadella noting that “customer demand continues to exceed available capacity.”
At a P/E of 28, Microsoft trades in line with its historical range despite carrying the fastest-growing hyperscale franchise on the planet. Analyst consensus target sits at $563.84 across 57 analysts (54 Buy, 3 Hold, 0 Sell), implying meaningful upside from here.
Targets are one data point among many. Shares are up 5.11% year to date, well behind the run in AMD and TSMC, which is precisely why the risk/reward looks cleanest here.
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TSMC: The Foundry Nobody Can Route Around
Every accelerator in this article is fabricated by TSMC. Q2 FY26 revenue of $40.20 billion grew 36%, gross margin expanded to 67.7%, and net income rose 77.4%. Advanced nodes (7nm and below) now generate 77% of wafer revenue, with 2nm posting its first 3% commercial contribution. Management raised full-year guidance to growth “slightly above 40%” in USD.
At a P/E of 37 and forward P/E of 25, TSMC is not cheap, but net income is compounding faster than revenue, which is what pricing power looks like.
Analyst consensus target of $540.20 from 19 analysts (17 Buy, 2 Hold, 0 Sell) implies substantial upside. TSM is up 38.4% year to date versus the S&P 500’s mid-single-digit gain over the same window. Geopolitical risk is real and permanent, but so is the fact that leading-edge silicon has one address.