Unlock the Power of Artificial Intelligence in Your Portfolio
As investors, we’re always on the lookout for ways to tap into the latest trends driving market growth. Right now, artificial intelligence (AI) is revolutionizing industries and sending stocks soaring. One of the most popular ways to invest in AI is through broad-based index funds like the Vanguard S&P 500 ETF. However, if you’re relying solely on indexing, you might be missing out on a hidden gem in the AI semiconductor space.
The AI Semiconductor Leader You Need to Know
Taiwan Semiconductor Manufacturing (TSMC) is the largest chip foundry in the world, commanding over 60% of global spending on chip manufacturing. This Taiwanese giant is capable of producing the most advanced chip designs, making it the go-to partner for tech heavyweights like Nvidia, Alphabet, and Meta Platforms. In fact, Nvidia CEO Jensen Huang praises TSMC as “the world’s best… by an incredible margin.”
A Virtuous Cycle of Growth
TSMC’s massive market share creates a self-reinforcing cycle of growth. With more revenue pouring in from chip designers, the company can reinvest in research and development, maintaining its technology lead and attracting even more business. This has led to impressive earnings growth, with revenue soaring 39% and earnings growing 54% year over year in its third-quarter results.
A Bargain Price for Exceptional Growth
Despite its impressive performance, TSMC’s shares trade at a relatively modest 24 times analysts’ consensus expectations for 2025 earnings. This is only slightly higher than the S&P 500’s valuation and well below that of other big AI stocks like Nvidia. With expected earnings growth exceeding 20% over the next five years, this price multiple looks like a steal.
Adding TSMC to Your Portfolio
If you’re an index investor, consider adding TSMC to your portfolio to maintain a market-cap weighted exposure. For others, TSMC could be a great addition to any portfolio, offering exceptional growth potential at a reasonable price. Don’t miss out on this incredible AI semiconductor stock – take a closer look at TSMC today.
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