Semiconductors are at the forefront of the artificial intelligence (AI) revolution, and Taiwan Semiconductor Manufacturing Company (TSMC) is well-positioned to benefit from this trend. TSMC, with a market capitalization of approximately $891 billion, is on track to join the exclusive group of companies dominating the technology landscape. The company’s growth is driven by the demand for chips used in AI processing, making it a key player in the industry.
TSMC’s shift from reliance on smartphone chips to high-performance computing, including AI processing, has been a game changer for the company. With clients like Nvidia, Arm Holdings, AMD, and Apple, TSMC has become a leading chipmaker in the AI space. Its revenue growth of 16.5% year over year in the first quarter shows the company’s momentum and potential for further expansion.
The company’s management outlook is optimistic, with a forecasted revenue of $20 billion in the second quarter and continued growth expected in the coming years. Wall Street analysts project TSMC to generate $85.17 billion in revenue by 2024, setting the stage for a trillion-dollar market cap. With revenue growth estimates of 32% and 22% in 2024 and 2025, respectively, TSMC is on track to reach this milestone sooner rather than later.
The prevalence of generative AI and the increasing adoption of AI technology bode well for TSMC’s future growth. CEO CC Wei’s forecast of AI-related revenue growing at a compound annual rate of 50% and accounting for more than 20% of total revenue by 2028 further supports the company’s growth prospects. Estimates suggest that AI could add trillions to the global economy annually over the next decade, highlighting the immense potential for companies like TSMC in the AI ecosystem.
TSMC’s attractive valuation, at 27 times forward earnings, offers investors an opportunity to capitalize on the AI revolution at a relatively low cost. With the company’s strong position in the semiconductor industry and its focus on AI processing, TSMC is poised for continued growth and potentially reaching a trillion-dollar market cap in the near future.
Article Source
https://www.fool.com/investing/2024/06/28/1-unstoppable-stock-that-could-join-microsoft-appl/