Stefon Walters, The Motley Fool
5 min read
In This Article:
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Taiwan Semiconductor Manufacturing Company has a 67% market share in the third-party chip foundry space.
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The chipmaker estimates its revenue will grow at a compound annual rate of 20% from 2024 to 2029.
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Alphabet's advertising business is sensitive to economic conditions, but has shown great long-term growth.
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10 stocks we like better than Taiwan Semiconductor Manufacturing ›
Tech stocks have been some of the best-performing stocks over the past decade. As a result, eight of the world's 10 most valuable public companies are now tech companies.
Admittedly, 2025 has gotten off to a rough start to 2025 for many of these top companies. Yet it's not time to panic. If anything, this is a time to scoop up some great companies that are trading at relative discounts.
If you're looking to add tech stocks to your portfolio, consider the following two companies. They're in good positions to return great long-term value.
Taiwan Semiconductor Manufacturing Company (NYSE: TSM), also referred to as TSMC, is one of the world's most important tech companies. It's the world's largest semiconductor foundry, with a market share in contract chipmaking space of around 67%.
For perspective, the second-largest semiconductor foundry is Samsung, which has a roughly 7% market share.
Instead of designing and producing its own semiconductors for general sale, TSMC manufactures chips on behalf of other companies. They come to TSMC with the designs, and it uses its top-of-the-line manufacturing facilities to bring those products to life. Its success with this model has made TSMC the go-to chip fabricator for well-known companies like Apple, Nvidia, Advanced Micro Devices, and dozens of others.
These high-dollar clients have treated TSMC well, too. In the first quarter, TSMC's revenue increased 35% year over year to $25.5 billion, and its cash from operations increased 43%. Both gains were continuations of impressive runs over the past five years.
The next few years should be lucrative: Management estimates that TSMC's revenue will grow at a compound annual rate of 20% from 2024 to 2029. If that forecast proves accurate, TSMC will be bringing in well over $200 billion by 2029.
Much of this optimism stems from the surging demand for AI-capable semiconductors as the broader AI boom continues. TSMC's high-performance computing (HPC) segment, which contains its AI-related semiconductors, accounted for 59% of the company's revenue in Q1. In Q1 2024, it was only 46%.
