Taiwan Semiconductor Manufacturing (TSMC) has strong potential for growth, aiming to reach $2 trillion market cap

From Nasdaq: 2024-07-28 07:20:00

Apple, Microsoft, and Nvidia are part of the exclusive $3 trillion market cap club, while Alphabet is the lone member of the $2 trillion club. Taiwan Semiconductor Manufacturing (TSMC) has the potential to reach the $2 trillion mark with its strong annual returns and growth prospects in the tech ecosystem.

TSMC’s foundry model has made it a leader in semiconductor manufacturing for companies like Apple, Nvidia, and Tesla. Its semiconductors are crucial for many electronics and applications, including iPhones, GPUs, cars, and medical devices. TSMC’s success has made it a top choice despite competition from companies like Intel.

TSMC is benefiting from a shift towards high-performance computing (HPC) and artificial intelligence (AI)-related revenue. In the second quarter, HPC accounted for 52% of TSMC’s revenue, marking a trend of increasing contributions from this segment over the past few quarters. TSMC’s strong financial performance has led to an increase in full-year revenue guidance and capital expenditures.

Despite its strong performance, TSMC’s stock is still valued reasonably with a forward P/E ratio below its five-year average. Geopolitical headwinds could impact TSMC, but its CEO is confident in the company’s growth plans. With expected growth in AI demand and smartphone market rebound, TSMC has the potential to join the $2 trillion club in the next decade.

Investors may want to consider other stock options recommended by The Motley Fool’s Stock Advisor analyst team, as Taiwan Semiconductor Manufacturing was not one of their top picks. The service provides guidance on building a portfolio and has outperformed the S&P 500 since 2002.Disclosure: The author has positions in Apple and Microsoft, and The Motley Fool has positions in various companies mentioned.



Read more at Nasdaq: This Undervalued Stock Could Join Alphabet in the $2 Trillion Club