Buy this Value-packed Artificial Intelligence (AI) Chip Stock worth 1 Trillion Dollars at Discounted Prices as Soon as Possible

Buy this Value-packed Artificial Intelligence (AI) Chip Stock worth 1 Trillion Dollars at Discounted Prices as Soon as Possible

Unbelievably, a mere ten public companies possess a whopping market cap of over a trillion bucks. Joining this exclusive club recently is the chip titan, Taiwan Semiconductor Manufacturing (TSM, down 1.22%).

In the blink of an eye, 2024 saw this powerhouse, also known as TSMC, skyrocket an astounding 90% – doubling their market cap from around $500 billion to a gleaming $1 trillion today. Yes, you heard it right – this is an unprecedented increase in just twelve months. But wait, there's more! This stock is still a steal, my friends, and here's why you should keep this gem in your investment radar.

Delving into TSMC's Financial Landscape

Take a glimpse at the table below to see TSMC's annual growth figures for both revenue and earnings across the previous quarters:

| Metric | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 || --- | --- | --- | --- | --- || Revenue growth (YOY) | 16.5% | 40.1% | 39.0% | 38.8% || Earnings per share growth (YOY) | 8.9% | 36.3% | 54.2% | 57.0% |

Notice how quickly TSMC has ramped up its top-line growth? But what truly sets this company apart is its expanding gross margin, leading to some serious earnings growth. So, with a financial profile like this, it comes as no surprise that shares of TSMC have been cruising to new heights.

Revenue growth (YOY)

Moreover, recent indications suggest that TSMC's long-term growth potential remains as robust as ever. Tech giants like Microsoft, Alphabet, Amazon, and Oracle are all pumping billions into AI infrastructure, and guess who's leading the charge? That's right – TSMC and its unparalleled foundry operations.

16.5%

Looking at the table above, one can see that TSMC is well-positioned to capture a significant slice of AI spending as cutting-edge data centers and chipware rise to the occasion.

40.1%

And yet, despite this plethora of impressive financial data, TSMC shares still haven't reached their peak pricing.

39.0%

Hanging onto this AI Powerhouse

38.8%

Okay, so you probably think you've missed the boat on TSMC. Stocks don't climb like this forever, and a trillion-dollar valuation might make it seem as though TSMC's growth is capped.

But even at its current $223 price, TSMC's forward price-to-earnings (P/E) ratio clocks in at just 25. Now, I say "just" because, believe it or not, the average forward P/E of the S&P 500 is a mere 24.

Earnings per share growth (YOY)

Yep, you read that right. TSMC, this colossus of a company, is only slightly more expensive than average. So, while its share price has been on an incredible run, its valuation remains quite reasonable.

8.9%

But, wait, there's even more good news: TSMC is an exception to the rule. This is a company with rapid-fire top-line and bottom-line growth, and at its core? Inflated earnings. Using earnings-based methodologies, TSMC's valuation starts to look exceptionally alluring.

36.3%

In a nutshell, I'm fully onboard the TSMC hype train. The ongoing AI boom will continue to fuel TSMC's dominance in the chip industry, and as a result, you should brace yourself for several more years of spectacular revenue and earnings growth. And here's the cherry on top – at its current price, you could be bagging a top-notch growth stock.

54.2%57.0%

According to recent enrichment data, there are several factors contributing to the perceived undervaluation of TSMC:

1. Geopolitical Risks: Historical fears surrounding a potential Chinese invasion have impacted TSM's stock price, but these concerns have diminished due to advancements in technology and China's fragile economy[1].
2. Market Perception: Market sentiment and geopolitical tensions have contributed to a discounted valuation for TSM, despite robust financials[1].
3. Competitive Landscape: Although TSM enjoys a dominant position in advanced chip manufacturing, strong competitors like Samsung and Intel are investing heavily in cutting-edge manufacturing processes, potentially narrowing the gap[4].
4. Regulatory Environment: Initiatives like the CHIPS Act in the U.S. to diversify the semiconductor supply chain could pose long-term challenges for TSM's market position and pricing power[4].
5. Valuation Multiple: Despite its strong growth prospects and high profitability, TSM's stock price remains relatively low compared to its growth potential. A forward P/E ratio of 25 is considered conservative given the company's robust earnings and revenue growth[1][3].
6. AI Boom Uncertainty: Some market pessimism surrounds the sustainability of the AI boom trend, which might contribute to TSM's stock price not fully reflecting its intrinsic value[2][3].
7. Investment Potential: TSMC's strong balance sheet, high net margins, and substantial capital expenditures indicate significant upside potential, but this potential is not fully reflected in the stock price, creating an opportunity for investors[1][3].

These factors, when combined, make TSM an enticing investment opportunity with its strong financials and growth prospects.

Renewing your interest in investing, it's worth noting that TSMC's financial health is stunning, with earnings per share growing by 57.0% in Q4 2024 compared to the previous year. Moreover, financial enrichment data suggests that the chip titan's stock might be undervalued due to geopolitical risks, market perceptions, and a competitive landscape.

Given TSMC's robust financial landscape and the ongoing AI boom, investing in this finance powerhouse could present a significant opportunity for long-term gains, as tech giants continue to pump billions into AI infrastructure.

Read also: