Investors could see at least a 60% return.
Investors could see at least a 60% return.
Taiwan Semiconductor Manufacturing (TSM +0.17%) has been one of the best-performing big tech stocks over the past three years, up 380%. That's better than every "Magnificent Seven" stock in that time, and it hasn't shown many signs of slowing down. As of this writing, it's up over 45% for the year.
Although it's not often considered a typical AI stock, TSMC's latest run is largely driven by the ongoing AI boom. As the world's largest semiconductor (chip) foundry, TSMC is as valuable to the AI ecosystem as virtually any company in the mix. And that's why I'm confident a $5,000 investment in the stock could grow to $8,000 by 2030. Let's take a deeper dive.
So, what exactly does TSMC do?
TSMC is the go-to chip manufacturing company for many of the electronics we use daily. While companies like Apple design their iPhone chips, Nvidia designs chips for its data center hardware, and Broadcom designs chips for its networking equipment, they all rely on TSMC to actually manufacture them.
No company has TSMC's expertise, results, and scale, so it's in a league of its own. It has a 73% market share in the foundry market, but its share of advanced AI chips is well into the upper 90% range. It has been using that to its advantage, too.
The data centers that AI hyperscalers like Amazon, Microsoft, Alphabet, and Meta Platforms are spending trillions to build are filled with advanced chips made by TSMC. So, no matter which of those companies pulls ahead in the AI race, TSMC will continue to benefit. That's a lucrative position to be in.
Moneyball Superscore
Profits continue to flow
TSMC's virtual monopoly has given it lots of pricing power. Companies either pay a premium for chips they know will be high-performance and meet the required scale, or go with a less efficient alternative and risk performance. TSMC's market shows which option companies generally choose.
Averytin News Financial update.