Chipsets known as Graphic Processing Units (GPUs) are probably the most important hardware in today’s generation AI development. Over the past few years, investing in semiconductor stocks has generally been a great idea – as some form of exposure to GPUs or data centers is almost guaranteed.
However, 2025 has not been off to a great start for chipstock.
Whether it’s a drama brought about by a Chinese startup? deepseekUS President Donald Trump’s new tariffs, or high-ranking investors’ expectations, many names in the chip space have not been doing very well this year. From a macro perspective, Vaneck Semiconductor ETF This has been a 4% decrease so far in 2025 (as of March 3). For certain companies, take nvidia and Advanced Micro Devicesso far this year, we have seen stocks fall 7% and 17% respectively.
While many investors seem unable to look away from Nvidia or AMD, there are other stocks that have been caught up in a wider sales in the semiconductor landscape.
Let’s explore why now seems like a lucrative opportunity to buy Taiwan Semiconductor Manufacturing(NYSE: TSM) Reach over your fist.
When it comes to brand awareness in the chip market, investors need to look far less than Nvidia or AMD. These two juggernauts lead the accusations of the GPU revolution. meanwhile, Broadcom It plays an essential role in equipping a data center with advanced chipware, Micron TechnologyHigh-bandwidth memory storage solutions are becoming more and more important as AI data workloads become more and more complex.
Many other names dominate the headlines and story points, so you wouldn’t be surprised if you weren’t aware of Taiwanese cicadas or TSMCs. The problem is that many leaders in the chip space, including Nvidia, AMD and Broadcom, should trust the Taiwan semi-finals for a large part of their success.
TSMC specializes in Foundry Solutions. This basically means that they are actually manufacturing chips and integrated systems for semiconductor companies. In other words, without TSMC, Nvidia’s chip architecture is more of an idea than a concrete product.
Given how much demand has been for GPUs over the past few years, it is not surprising that Taiwanese cicadas have risen in revenue and profits. That being said, I think the company’s growth has just begun in Gear.
Many of “7 magnificent companies” Microsoft, Amazon, alphabetand Meta Platformis investigating custom silicon as a strategy to migrate from Nvidia’s overreliance on chipware. These big tech giants and ChatGpt makers Openaireportedly working with TSMC to help you realize your vision.
Although TSMC has already gained almost two-thirds of the opportunities in the foundry market, I believe the emergence of more custom silicon, along with new architectures from NVIDIA and AMD over the next few years, will further strengthen the company’s leadership position and lead to a long-term stage of acceleration in revenue and profits.
Image source: Getty Images.
Despite TSMC’s strong market position and robust financial outlook, chip stock stock stocks are surprisingly cheap.
Currently average forward price (P/E) multiple S&P 500 As the chart above shows, Taiwan Semi’s forward P/E is approximately 19 years old. To me, this disparity suggests that investors view investments in the S&P 500 as less risky than TSMC.
In my eyes, the two main risks that turn around investing in TSMC are:
The semiconductor industry is periodic.
Geopolitical tensions between China and Taiwan.
I can understand these points in an academic sense, but I think the fear about those topics is exaggerated. Chip demand is not expected to be slow anytime soon as the market is expected to increase ten times over the next decade, reaching nearly $1 trillion.
In addition, TSMC’s business is not exclusive to Taiwan. In fact, the company announced in early March that it would invest an additional $100 billion to expand its manufacturing footprint in the US.
I think TSMC stocks are a great deal now. As the AI ​​revolution continues to advance full steam, long-term investors may want to consider buying this stock on their fist before the company’s manufacturing operations grow even further.
Consider this before purchasing inventory at Taiwan Semiconductor Manufacturing.
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development, Facebook spokeswoman and sister to Metaplatform CEO Mark Zuckerberg, is a member of Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of the board of directors of Motley Fool. Adam Spatacco It has positions for Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. Motley Fool recommends advanced microdevice manufacturing, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Taiwanese semiconductor manufacturing. Motley Fool recommends Broadcom and the following options are recommended: A $395 call at Microsoft for January 2026 and a $405 call at short term Microsoft for January 2026. To Motley’s fool Disclosure Policy.
