Taiwan Semiconductor Manufacturing is predicted to be the top-performing semiconductor stock in the next decade.
From Yahoo Finance: 2025-05-04 15:30:00
The rise of artificial intelligence (AI) in the semiconductor industry is expected to increase in the coming years. Taiwan Semiconductor Manufacturing is a key player in providing foundry services to chipmakers, with a stock trading at a historically cheap valuation. The launch of ChatGPT led to Nvidia’s stock soaring 550%, positioning it as a multitrillion-dollar enterprise in the AI sector.
Taiwan Semiconductor Manufacturing (NYSE: TSM) is poised to dominate the AI chip arena in the next decade, supported by growth prospects and valuation trends. TSMC’s engineering prowess serves major players like Nvidia, AMD, Broadcom, OpenAI, Amazon, and Qualcomm by manufacturing their chips and integrated systems products.
In 2024, TSMC recorded $88.3 billion in sales and $6.81 in earnings per share, with Wall Street expecting rapid revenue growth and healthy profitability for the company. The AI semiconductor market is projected to reach $233 billion by 2034, with TSMC holding over 60% market share and well-positioned for future financial success.
Despite a P/E ratio of 21, in line with its 10-year average, TSMC’s valuation has recently compressed due to uncertainties surrounding new tariff and trade policies. However, the company’s long-term growth opportunity remains strong, making it a top choice for investors seeking exposure to chip demand and AI infrastructure spending.
Investing in TSMC is a bet on overall chip demand and AI infrastructure spending, positioning the company to benefit regardless of market dynamics. With a discounted valuation compared to the S&P 500 index, TSMC represents a compelling opportunity in the semiconductor sector for the next decade.
The Motley Fool Stock Advisor team identified the 10 best stocks for investors to buy now, excluding Taiwan Semiconductor Manufacturing. Previous recommendations like Netflix and Nvidia have delivered substantial returns, with Stock Advisor boasting a total average return of 906%, outperforming the S&P 500.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, serves on The Motley Fool’s board of directors. The Motley Fool holds positions in Advanced Micro Devices, Amazon, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing, recommending Broadcom. Their disclosure policy applies to these recommendations and investments.
Read more at Yahoo Finance: Prediction: This Will Be the Top-Performing Semiconductor Stock Over the Next 10 Years (Hint: It’s Not Nvidia)