Unlock the Power of Artificial Intelligence with This Top Stock
The artificial intelligence (AI) revolution is transforming industries and creating unprecedented opportunities for investors. Palantir Technologies, a leading AI player, has seen its stock soar by 370% in 2024, leaving many wondering if they’ve missed the boat. Fear not, as there’s a compelling alternative that offers a more affordable entry point and tremendous growth potential: Taiwan Semiconductor Manufacturing (TSMC).
The AI Boom Fuels TSMC’s Rise
TSMC, the world’s largest independent semiconductor foundry, has seen its shares nearly double in 2024. The company’s fabrication plants are in high demand, particularly from fabless chipmakers designing AI-specific chips, such as graphics processing units (GPUs) and application-specific integrated circuits (ASICs). This has led to a significant jump in TSMC’s revenue, with a 32% increase in the first 11 months of 2024.
A Leader in the Chip Industry
TSMC’s management expects 30% revenue growth for 2024, reaching $90 billion. Consensus estimates project healthy growth for the next couple of years, with some major AI chipmakers indicating that TSMC could exceed expectations. Broadcom, for instance, expects its serviceable addressable market in custom AI processors and networking chips to reach $60 billion to $90 billion by fiscal 2027.
Capacity Expansion to Meet Growing Demand
To meet the surging demand for AI chips, TSMC is boosting its advanced chip packaging capacity. The company plans to double its capacity to 70,000 wafers per month in 2025 and further increase it to 90,000 wafers per month in 2026. This expansion will enable TSMC to fulfill more orders from customers and maintain robust growth in its top and bottom lines.
A More Affordable AI Stock
Compared to Palantir, TSMC offers a more attractive valuation. Palantir’s price-to-earnings ratio stands at 411, while TSMC’s trailing earnings multiple is at 33. Moreover, TSMC’s earnings are expected to grow at a stronger pace of 27% to $8.93 per share in 2025, making it a more compelling buy.
A Dominant Player in the Foundry Market
TSMC’s dominant position in the foundry market, with a 64% share, ensures it is well-positioned to capitalize on the secular growth in AI chips. With its strong track record, expanding capacity, and growing demand, TSMC is an attractive AI stock to buy and hold.
Don’t Miss Out on This Opportunity
If you missed Palantir’s remarkable surge, consider investing in TSMC before it takes off further. With its strong fundamentals, growing demand, and affordable valuation, TSMC is an excellent choice for investors seeking to tap into the AI revolution.
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