Taiwan Semiconductor Manufacturing Company Ltd is having a big year.

The company is expected to report a 54% jump in profit this quarter, reaching around $10.7 billion. That’s because more companies are building AI-powered products, and TSMC makes many of the chips that power them. If you use a phone, laptop, or tablet with AI features, there’s a good chance TSMC was involved in making it.

The company is also investing a lot of money. Earlier this year, it said it would spend up to $42 billion in 2025 to build new chip factories and upgrade its technology. And just a few weeks ago, it signed a $100 billion deal during a visit with former President Donald Trump at the White House.

Trump’s Trade Trap

But there are challenges. While Trump praised the company, he also warned that any chipmaker not building enough in the U.S. could face a 100% tax. That puts pressure on TSMC, which still makes most of its chips in Taiwan.

To avoid trouble, TSMC is now building factories in Arizona. However, making chips in the U.S. could cost more. Experts say this might cut into the company’s profit by 2% to 3% each year over the next few years. That’s a big deal for a company that depends on keeping costs low.

Another risk is that TSMC relies heavily on Apple. If there’s a problem between China and the U.S., Apple’s business could slow down, and TSMC would feel the impact.

Hot or Not?

Still, big investors are holding strong. Around 30 billionaire investors together own nearly $14 billion worth of TSMC stock. Some hedge funds have even shifted money away from Europe and Asia to invest more in companies like TSMC.

TSMC is also working more closely with Intel. Together, they plan to run chip factories in the U.S. This could help TSMC stay in good standing with regulators and stay ahead in the AI race.

TSMC is growing fast and riding the AI wave. However, political risks and rising costs make this a stock that could go either way. It’s a strong pick, but not without risks.