TSMC Says AI Chip Demand Is Still Far Above What It Can Supply. That's Why I'd Buy Nvidia Stock.

TSMC (TSM) beat Q3 revenue forecasts and raised its 2026 guidance to 44% growth, yet NVDA still sits 9% below its record high. That disconnect is the trade.

CEO C.C. Wei said AI chip demand remains far above what TSMC can supply, with no signs of slowdown. For NVDA, a key beneficiary of that demand, the supply constraint points to continued strength in orders rather than weakness.

The valuation gap sharpens the argument. NVDA trades at 14x forward earnings versus 19x for TSM. The analyst behind the call sees NVDA as undervalued relative to its supplier, reasoning that the demand TSM describes should ultimately flow through to NVDA's results.

Interpretation: the market is pricing NVDA's pullback as a near-term volatility event, while TSM's guidance reads as a durable demand signal. The 5-turn multiple discount suggests investors are assigning NVDA more risk than the supplier's own outlook implies.

The analyst acknowledges near-term volatility risks. A 9% drawdown from the high shows NVDA can move sharply even when upstream data is bullish.