Artificial intelligence role (AI) is expected to be significantly increased in the semiconductor industry in the coming years.
The manufacture of Taiwan semiconductors is a key partner for chip manufacturers, as they are based on the company’s foundry services.
While semi -taiwan growth prospects seem bright, actions are marketed with historically cheap rating.
The launch of Chatgpt on November 30, 2022 represented one of the main catalysts that led to the revolution around artificial intelligence (AI). Since this date the actions of the semiconductor shares Nvidia They have increased by 550%astronomical, transforming the company into a multitrile dollar company in the process. Although semiconductor chips must remain a comprehensive component of AI development, investors want to identify new growth opportunities beyond Nvidia.
Manufacture of Taiwan Semiconductors(NYSE: TSM) It is another company that seems well positioned to dominate the Ai Chip Arena for the next decade. Their growth prospects and evaluation trends support the case why Taiwan semi is my highest option in the chip space right now.
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You are likely to be familiar with names like Nvidia, Micro advanced devicesand Ample When it comes to advanced chipset and data center infrastructure used to create AI applications. What you may not know, however, is the role of Taiwan semi game in the background.
Nvidia, AMD, Broadcom, Openai, Amazon, QualcommAnd many others are based on TSMC manufacturing processes to help manufacture their integrated system chips and products. In other words, Taiwan semi contributes the engineering capacity of the older players from AI to life.
Image Source: Getty’s pictures.
In 2024, TSMC generated sales of $ 88.3 billion and $ 6.81 in earnings per action. According to consensus estimates then Wall Street hopes that the company’s upper line will continue to grow rapidly over the next two years, maintaining a healthy profitability as well.
The AI in the semiconductor market is expected to reach a market size of $ 233 million by 2034, according to precedence research. Given that TSMC already has more than 60% of the foundry market, combined with its long list of leading chip designers in the industry as customers and the increase in personalized silicon silicon chips, Taiwan semi is in an excellent position to achieve or even exceed the financial estimates illustrated above.
From this writing, Taiwan semi-sells in a pre-Beeching (P/E) relationship of 21. This is in accordance with its average ten years.
But TSMC assessment has been significantly compressed in recent months, and the main cause is the continuous uncertainty around the new rates and commercial policies in the United States
Although it is difficult to predict when there will be relief from ongoing trade negotiations, I usually be in the camp that believes that growth stocks are oversized right now. From a macro point of view, rates can change at any time and current policies will not last forever. Investors are exaggerating that impact tariffs could have in the TSMC business in the short term, and despise the brilliant long -term opportunity of the company.
Unlike an investment in NVIDIA, buying TSMC shares more or less serves as a long -term bet on global chip demand and AI’s infrastructure spending. That is, regardless of which company’s company or data center teams are more in demand: TSMC benefits.
This puts the company in the midst of a generational and generational megatrend. Taiwan semi -growth prospects are the best that has been at least in the last decade, and yet the company’s assessment is not made of its average ten years and even represents a discount on the S&P 500 Index.
Put all together and have a clear case why Taiwan semi is the maximum chip stock in the next decade.
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John Mackey, a former CEO of Whole Foods Market, a Amazon subsidiary, is a member of the Board of Directors of the Motley Fool. Adam Spatacco It has positions in Amazon and Nvidia. The Motley Fool has positions and recommends the manufacture of advanced semiconductors, Amazon, Nvidia, Qualcomm and Taiwan. The Motley Fool recommends Broadcom. The mold’s fool has a Outreach policy.
