microsoft CEO Satya Nadella said last year that up to 30% of Microsoft’s code was written using artificial intelligence (AI). I can only imagine that number is higher now.
Humans are definitely still needed to maintain quality, a fact demonstrated when Microsoft appointed Charlie Bell, former head of the company’s security business, to now focus exclusively on maintaining the quality of the company’s products. It depends directly on Nadella.
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Microsoft clearly does not plan to reduce the amount of code written by AI. Nadella himself said it was steadily increasing, and CTO Kevin Scott predicted that by 2030, 95% of the company’s code could be written by AI.
With this in mind, what is the best way to make AI become a permanent part of the IT industry? By my calculations, one of the best ways to play with a single ticker is Semiconductor manufacturing in Taiwan (NYSE: TSM).
Image source: Getty Images.
Taiwan is where 60% of all semiconductor chips in the world are produced.
But the country’s footprint is even larger than that implies because 90% of the world’s advanced semiconductor chips, 7 nanometers (nm) or smaller, are produced in Taiwan.
And those are the chips you need to run the high-end AI programs that Microsoft and others use to write their code.
Microsoft uses a lot NVIDIA hardware to run your AI. The same goes for almost everyone else. IOT Analytics reports that Nvidia controls 92% of the data center GPU market. Its closest competitor is Advanced Microdevices at 4%.
But those Nvidia graphics processor units (GPUs) are made by Taiwan Semiconductor. So are its competitors AMD, along with Apple, Broadcom, Qualcomm and others, either in whole or in part.
In fact, Nvidia’s top-of-the-line Blackwell chip is produced at a Taiwan Semiconductor factory in Arizona.
The semiconductor chip market, and by extension the AI data center hardware market, simply does not exist without Taiwan Semiconductor, which does not design any of the chips it produces.
Taiwan Semiconductor is a “pure foundry” company. All it does is contract produce chips. But it is absolutely dominant in the space, with a 72% market share in the third quarter of 2025. Samsung takes second place with 7%.
I’m sure you’ve heard of pick and shovel plays. But Taiwan Semiconductor is he pick and shovel game for the artificial intelligence industry and the technology industry in general.
And the company is expanding its presence beyond Taiwan to strengthen its global dominance. Taiwan Semiconductor is expanding the Arizona semiconductor factory I mentioned to produce more chips in the US, and the company ultimately plans to have six factories and two advanced packaging facilities in the state. Taiwan Semiconductor also has elaborate plans to expand its manufacturing footprint in Japan and Germany.
And all that expansion doesn’t come at the expense of the company’s bottom line, which remains incredibly healthy.
Right now, Taiwan Semiconductor is one of only two non-US companies with a market capitalization of $1 trillion or more. Its latest results reflect well its size and influence.
In 2025, the company’s revenue exceeded $122.4 billion, an increase of 35.9% from 2024. Its diluted earnings per share (EPS) grew 46.4%. Taiwan Semiconductor also maintains stellar profitability with a net profit margin of 45%.
The company also projects 30% revenue growth by 2026 and a 25% compound annual revenue growth rate (CAGR) through 2029.
Finally, Taiwan Semiconductor is trading at a price-earnings-growth (PEG) ratio of 1.2 right now, which means it is very close to fair value relative to future earnings projections.
Add all that up and you have a strong long-term buying and holding outlook thanks to the pick-and-shovel game of the entire global tech industry.
And if Microsoft wants to generate 95% of its code with AI by 2030, it will need a lot more hardware, which Taiwan Semiconductor will happily produce and will, in all likelihood, continue its growth streak into the future.
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James Hires has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Advanced Micro Devices, Apple, Microsoft, Nvidia, Qualcomm and Taiwan Semiconductor Manufacturing and is short Apple stock. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
Satya Nadella says that “all software is being rewritten.” Here’s one of the best artificial intelligence (AI) stocks to own for 2026. Originally published by The Motley Fool
