Semiconductor stocks have been some of the biggest beneficiaries of the market’s latest big giant, Artificial Intelligence (AI). In particular, suppliers of graphics processing units (GPUs) Nvidia and Broadcom Compared to the entire leap S&P 500 and Nasdaq Composite Materials.
However, in the background, casting experts Taiwan Semiconductor Manufacturing(NYSE: TSM) – Called TSMC – quietly becoming a leader in the chip space. The best part? Stocks are still cheap. That’s why I think Taiwan’s halftime will be the best performing chip stock in the next 10 years.
Data center GPUs are important hardware that power a variety of exciting generation AI applications. In this sense, Nvidia, Broadcom and Advanced Micro Devices When training use cases such as big-word model (LLM) or machine learning, they should all be regarded as leaders.
But what you may not know is that these companies rely heavily on the Taiwan semifinals to actually produce their chip software. TSMC specializes in casting services, making chipsets for many different semiconductor providers that span computing, mobile devices, cloud infrastructure and more.
Although this provides a reason for the current situation in Semi, it is the future prospect that is more interesting. According to Precence Research, the total addressable market (TAM) for AI chips is expected to reach nearly $1 trillion by 2034, about 10 times the size currently estimated.
When you also consider cloud high standards (e.g. Amazon,,,,, letterand Microsoft It is expected to be in 2025 alone, and I think the AI chip market will grow exponentially in the next few years.
YCHARTS’ TSM revenue (quarterly) data.
The idea to understand here is that for the Taiwanese Peninsula, the demand for NVIDIA and its peers is getting better and better, as the company is deeply embedded in the ecosystem of many leading semiconductor companies. Just to emphasize the importance of TSMC to other chip companies, believing that it accounts for more than 60% of the chip manufacturing market – definitely attracting competitors (e.g. Intel and Samsung.
Image source: Getty Images.
The chart below illustrates the share price returns between NVIDIA and TSMC over the past few years. Although Taiwanese half stocks generate returns in the market, it is not even close to the experience of NVIDIA investors.
YCHARTS TSM data.
Even if the AI chip market is expected to continue to grow, I think the competition between AMD and custom silicon providers used by HyperScalers will be a headwind for NVIDIA in the coming years. In contrast, the Taiwanese semi-finals can actually benefit from competition in the chip field.
So, I actually think TSMC’s revenue and revenue acceleration will continue to climb. Still, TSMC trades at a forward price (p/e) multiple of 22.6 – very close to the average forward p/e of the S&P 500, which is 20.9.
In my opinion, TSMC is in a profitable position to continue to expand its influence in the foundry industry. As competition in the AI field continues to rise, the growing market for chips makes me bullish. In the long run, investment in the Taiwan Peninsula will indeed bring returns to the Advanced 500 index.
However, I think it’s so to speak, TSMC stock hasn’t yet owned its “NVIDIA Moment”. For all these reasons, I think the stock is a effortless opportunity to trade. Investors in the long term may want to consider digging out TSMC’s stock immediately and grabbing it.
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John Mackey, former CEO of Amazon’s subsidiary Whole Foods Market, is a member of the board of directors of Motley Fool. Alphabet executive Suzanne Frey is a member of the Motley Fool board of directors. Adam Spatacco has positions in letters, Amazon, Microsoft and NVIDIA. Motley Fool has a location and recommends advanced micro devices, Amphabet, Amazon, Intel, Microsoft, Nvidia and Taiwan Semiconductor Manufacturing. Motley Fool recommends Broadcom and recommends the following options: $395 phone on January 1, 2026 on Microsoft, short February 27, 2025, $27 on Intel, short January 2026 on Microsoft $405. Motley Fool has a disclosure policy.
Prediction: This will be the best performing chip stock in the next decade (tip: not Nvidia) was originally published by Motley Fool
