Semiodic supplies have been in an impressive form in the last three years, because the demand for chips used for training and arranging artificial intelligence models (AI) in data centers in this period has been incredibly increased.
Not surprisingly, PHLX sector sector The 44% index gains in the last three years have been greater than 29% of jumps that have ran into technology NASDAQ-100 Technology Sector index in the same period. Taiwanese semiconductor product(Nyse: tsm)Or TSMC, it was one of the large users of Sopurt semi -sequence consumption, with its proportions increased by 69% in the last three years (from this writing).
TSMC -O’s solid rally brought its cap up to $ 980 billion. A good part is that this semiconductor’s bell tower may seem to be upside down in the long run, and it may even reach two trillion dollars in a market cap.
Let’s look at the reasons why.
It is easy to understand why TSMC shares have grown. The company makes chips for all the main chip designers including Nvidia and AMD. In fact, all chips manufacturers who designed AI chips use TSMC production facilities to produce their chips.
Consumer Electronics companies like Apple who want to offer AI solutions to their customers on their devices also touch TSMC to produce advanced processors. All this explains why the left -handed giant based in Taiwan recorded a sharp increase in its growth last year.
More importantly, TSMC’s dominant 64% share in the global foundry market means that it has used the maximum of secular growth on the AI chip market in the long run. According to one estimate, the global market of AI chips could reach an annual growth rate of almost 35% in the next decade. The impressive market growth is expected to be launched by AI penetration in multiple industries ranging from health care to finance to car, among other things.
As TSMC produces chips for leading chip designers who serve these industries, including similar Qualcomm and BroadcoThe company should ideally be able to maintain a healthy growth that has been in the last year. This is exactly what the administration pointed out in January of the company Conference Call for Earnings::
Fortified by our technological leadership and wider customer base, now we predict that the growth of revenue from AI accelerator approaches CAG in the middle of 40% for a five-year period, starting with a larger base 2024. We expect the ACcelerator to be the strongest driver of our HPC platform growth and the biggest contributions in the following conditions of our overall growth.
Moreover, TSMC predicts that its total revenue will increase at an annual rate of about 20% over the next five years. This could send TSMC’s best line to almost $ 225 billion after five years from last year’s number of just over $ 90 billion. TSMC has a five -year average sale of 9, and a similar multiple after five years could send its market cap to just over $ 2 trillion.
The above scenario indicates that TSMC supplies are more capable of doubling in the next five years. However, they may be able to provide more upside down if the market decides to reward it with a richer estimate. It is worth noting that TSMC is currently trading with 11 times more than sales. So, the multiple sales we assume after five years means that they will then trade with discount.
But it will not be surprising to see that at the time he traded on the premium, as well as up to a five -year average, especially since his share on the foundry market improved. More specifically, his market share of the foundry increased by three percentage points in the third quarter of 2024, compared to the period of the previous year.
He may be able to further strengthen their position in this market. Samsung is the second largest foundry in the world, with a much smaller share of 12%. TSMC wants to expand the gap with Samsung, because the first one wants to move on to a more advanced 2-nanometer (NM) production node. TSMC is expected to start producing 2NM chips for customers in the second half of 2025. This can give him a small advantage over Samsung, which can start 2NM production in the fourth quarter of the year.
More importantly, TSMC reportedly planned improvements to improve its 2NM technology so that it could provide larger computer performance and efficiency. As such, the TSMC grip over the global semiconductor’s global market is likely to remain firm in the long run. The purchase of this stock currently looks like non-famed, as its earnings are more than 27 lower than a multiple 34 NASDAQ-100 Index (using an index as a proxy for technological stocks).
Have you ever felt like you missed the ship in buying the most successful stocks? Then you will want to hear it.
On rare occasions, our expert team of analyst issues “Double” supplies Recommendation to companies they think will appear soon. If you are worried that you have already missed the opportunity to invest, now is the best time to buy before it is too late. And numbers speak for themselves:
Nvidia:If you invested $ 1,000 when we doubled in 2009,You would have $ 323,920!*
Apple: If you invested $ 1,000 when we doubled in 2008, You would have $ 45,851!*
Netflix: If you invested $ 1,000 when we doubled in 2004, you would have $ 528,808!*
We are currently releasing “double down” warnings for three incredible companies, and maybe there will be no other chance like this.
Sharp Chauhan There is no position in any of the shares mentioned. Motley Fool has positions and recommends advanced micro devices, Apple, Nvidia, Qualcomm and Taiwan Semiconductor. Motley Fool recommends Broadcom. Motley Fool has disclosure rules.
