This Stock Quietly Benefits From Oracle and NVIDIA’s AI Surge

Key Points

• Oracle’s booming cloud infrastructure growth creates indirect but significant upside for Taiwan Semiconductor via NVIDIA’s chip demand.
• Taiwan Semiconductor is the critical supplier in the AI-driven cloud boom, maintaining over 80% of advanced chip manufacturing.
• Analysts and institutional investors are ramping up bullish positions, with price targets suggesting strong upside potential remains.

With the U.S. technology sector booming again, investors have to start playing a different game than they have in the past couple of years. The new strategy focuses on identifying the hottest names in the sector that are driving the rapid growth and adoption of artificial intelligence. It also includes uncovering the “lateral” opportunities poised to benefit from this powerful tailwind in the months and years ahead.

These lateral plays will be less popular and dull in the grand scheme. But that also means there will be less speculative behavior, limiting scary price whipsaws. 

One such under-the-radar winner is Taiwan Semiconductor Manufacturing NYSE: TSM, and its latest catalyst comes from an unlikely source: Oracle Corp. NYSE: ORCL.

Oracle’s Cloud Surge Sends a Ripple Through the Supply Chain

Oracle’s recent earnings sent its stock soaring over 35%, largely thanks to a 28% year-over-year (YOY) surge in cloud revenue, which hit $7.2 billion.

But the more telling number was Oracle’s $455 billion in remaining cloud infrastructure obligations—a staggering 359% jump.

What does this have to do with Taiwan Semiconductor? 

Oracle's price surge is largely due to its rapid cloud expansion, which depends on the most advanced semiconductors available. Oracle doesn't make chips; it relies heavily on NVIDIA Co. NASDAQ: NVDA—and by extension, on NVIDIA’s primary chip supplier, Taiwan Semiconductor.

Taiwan Semiconductor: The Backbone of AI Infrastructure

Here’s where the hidden value lies.

NVIDIA may be the poster child of AI chips, but it’s Taiwan Semiconductor that manufactures the cutting-edge nanochips powering those GPUs.

TSMC holds over 80% of the advanced chip fabrication market, particularly in the 5nm and below space. 

So, while Oracle and NVIDIA are both hot names right now, the quiet king of AI chips is Taiwan Semiconductor.

The more Oracle expands its cloud services, the more chips NVIDIA must supply—and the more wafers TSMC must produce. It’s a high-stakes feedback loop, and TSMC is the foundational enabler.

Why TSM Stock Still Has Room to Run

Despite trading near its 52-week high after a 22% rally in the past quarter, this new ceiling isn’t even close to what could be called “intrinsic value”, something Wall Street analysts are beginning to make very clear.

Analysts have rated TSM a Buy and given it a $286.67 price target, reflecting a potential 9% upside from today’s prices. 

Some analysts think that Oracle’s and NVIDIA’s growth has not yet been priced into Taiwan Semiconductor’s current valuation—like Barclays analyst Simon Coles, who recently upgraded the stock to Overweight with a $325 price target, indicating potential for 24% upside from current levels.

And the institutional money is moving accordingly. Select Equity Group, for example, increased its position in TSM by 21.9% in of August 2025, bringing total holdings to $511.9 million. This institutional momentum reinforces the fundamental strength behind the breakout.

As the stock continues to break out on strong fundamentals, there will most likely be increased buying activity.

Stability in the Eye of the AI Storm

Unlike headline AI stocks like NVIDIA, which can experience sharp swings due to speculative trading, Taiwan Semiconductor offers a steadier ride. Its role is structural, not sensational—and that’s exactly what makes it so compelling. As Oracle’s cloud business continues its meteoric rise and NVIDIA scrambles to meet demand, Taiwan Semiconductor remains the indispensable engine behind them both.