As the calendar flips to November, savvy investors are already positioning themselves for a prosperous 2025. Amidst the buzz, one trend stands out: artificial intelligence (AI). It’s crucial to allocate a portion of your portfolio to this revolutionary shift. Two AI-driven companies that catch my attention are Taiwan Semiconductor (NYSE: TSM) and Meta Platforms (NASDAQ: META).
The AI Boom: A Golden Opportunity
Taiwan Semiconductor, the world’s largest chip manufacturer, has witnessed exponential growth in its AI-related business. In Q3, the company projected a tripling of AI chip revenue, accounting for a mid-teens percentage of its total revenue. This rapid expansion surpasses management’s initial expectations, underscoring the immense demand for AI-powered computing.
A Dominant Player in AI Chip Manufacturing
Taiwan Semiconductor’s valuation, at 22.1 times 2025 earnings, is relatively modest considering its dominant position. As the AI arms race intensifies, this company is poised to reap significant benefits.
Meta Platforms: A Key Player in AI Development
Meta Platforms, the parent company of Instagram and Facebook, is heavily invested in AI research and development. Despite concerns about capital expenditures, Meta’s solid Q3 performance, with 19% year-over-year revenue growth and 37% EPS increase, demonstrates the strength of its core business. Trading at 24 times 2025 earnings, Meta’s valuation is reasonable for a tech giant.
Balancing Growth with Value: PayPal’s Hidden Gem
PayPal (NASDAQ: PYPL), often overlooked in the AI frenzy, offers a unique value proposition. CEO Alex Chriss has successfully driven efficiency improvements and explored new use cases, resulting in significant transaction margin growth. With earnings expected to grow in the low to mid-teens for 2024, PayPal’s stock trades at a dirt-cheap 16 times 2025 earnings. Management’s aggressive share repurchases have reduced average shares by 7% over the past 12 months, making it an attractive buy.
Don’t Miss the Boat: Invest in These Hidden Gems
While AI-driven companies like Taiwan Semiconductor and Meta Platforms are grabbing headlines, don’t overlook undervalued gems like PayPal. By diversifying your portfolio with a mix of growth and value stocks, you’ll be well-positioned to capitalize on the opportunities 2025 has in store.
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