2 Hidden Businesses to Watch as AI Keeps Heating Up

**Jon Quast** (0:02)
Growth is accelerating for the world's largest chip maker. You're listening to Motley Fool Hidden Gems Investing.
Welcome to Motley Fool Hidden Gems Investing. I'm Jon Quast, and I'm joined today by Fool contributors, Matt Frankel and Rachel Warren. We're going to take a question from the mailbag later in the show about selling a stock for personal reasons, but first, I wanted to hit this news from Taiwan Semiconductor. That is ticker symbol TSM. Now, the reason that I want to talk about this is not because it's a hidden company. I know I'm going to get skewered for this, but it's a $2 trillion company. Okay, it's large. I get it. It's not hidden, but I think that some people still underestimate how important it is. The company fabricates over 90 percent of the world's most advanced computer chips, and it's an estimated 60 percent of all computer chips. So it's a very important company, and when we see things with its business, it's really a leading indicator of global AI demand. So I did want to highlight TSMC today because AI stocks have pulled back in recent weeks. I think some investors are saying, listen, the trends have peaked, the downtrend is coming, but this company just reported monthly numbers, and it throws cold water on the fear narrative. Rachel, walk us through some of the important things we need to know.

**Rachel Warren** (1:17)
Yeah, I mean, you can look at trends in terms of looking at how share prices are performing, but the numbers are what really tell you what's happening behind the curtain, so to speak. And TSMC is, if you want to think of it this way, essentially the whole factory floor for the entire AI boom. And that's why their monthly sales report, their first half sales reports, are really important reality checks for the market. They are not seeing a slowdown. At TSMC just announced that June revenue jumped nearly 68% compared to last year. And why is that so important? Well, June sales usually dip because of normal summer seasonality, but this year they actually rose from May, and it shows that demand isn't just steady, it's actively accelerating. It very much pushes back against the narrative that the AI build out is losing steam. And I think that's something that's really, really important for investors to pay attention to.

**Jon Quast** (2:05)
For sure. And this is one of those companies that does give us kind of these periodic monthly updates on what's happening. And you look in April, 18% year over year growth, May 30% growth, and now that 68% growth that you just highlighted, so clearly an acceleration trend. But I'm going to zoom out just a little bit and ask you just to walk us through what does that look like? What's the context here now for the first half of the year? And what can we expect maybe for the back half?

**Rachel Warren** (2:30)
So for the first half of 2026, TSMC's total revenue reached 2.4 trillion new Taiwan dollars. In USD, that's about $75 billion.
That was up 36% compared to the same period in 2025 You know, I noted that 68% year over year increase in June revenue. The company also reported it was a 6% sequential increase, which is a little up from the prior month. So TSMC, you know, they manufacture semiconductors for a wide range of applications, spanning smartphones to high-performance AI computing systems. Their key clients are all the big US tech leaders, including the likes of NVIDIA and Apple and advanced micro devices. So TSMC is on track to generate over $40 billion just from AI chip revenue in 2026 That's about 25% of its total revenue overall. The reality is that the companies from Microsoft, Alphabet to Meta are locked into massive capital expenditure budgets. They're essentially waiting in line because TSMC's advanced manufacturing lines are booked solid. Now, TSMC reports their full earnings this Thursday. A lot of the focus is going to be on their capacity bottlenecks, whether they can raise prices for their core products. But essentially, when the primary supplier of the world's most critical tech shows this momentum, it would indicate that the hardware cycle still has a lot of runway left.

**Jon Quast** (3:47)
For sure, and to be clear, it is not just Taiwan Semiconductor. I also want to highlight some news here from Meta Platforms. And again, I realize that it is not a hidden company, but I think that we're going to hit here just a moment. If you hang with us, there are some underlying trends that we want to get to. But Meta Platforms making another announcement that just kind of throws cold water on the AI trend is peaking narrative. You look at its Hyperion Data Center in Louisiana. This is a very important data center for the company that is currently being built out. Originally, a $10 billion facility announced late 2024 Then late last year, upping that to $27 billion, but the company coming out today, and it is increasing this project yet again, Matt.