Why Leave Apple for Two AI Stocks?

Published Date : 20/06/2025 

Apple's growth has stagnated, and its innovations are lagging behind. Instead, consider investing in Taiwan Semiconductor Manufacturing (TSMC) and ASML, two companies at the forefront of AI and semiconductor manufacturing. 

Apple (AAPL) has been a dominant force in the smartphone era, thanks to the iPhone. However, the tech giant is now facing significant challenges in the age of artificial intelligence (AI), cloud computing, and mixed reality. The recent flop of the Vision Pro virtual reality headset and the company's slow progress in consumer AI have raised concerns. It's time to consider alternative investments in the AI space, specifically in Taiwan Semiconductor Manufacturing (TSMC) and ASML.

Apple's lagging innovation has been a growing concern. Revenue growth has been stagnant for years, and while the iPhone remains a top product, the market is maturing. Ancillary products like the Apple Watch and AirPods, though successful, are not enough to significantly impact the company's massive market capitalization of $3 trillion. Management claims to be working on new innovations, but the results have been underwhelming. The iPhone's yearly updates are increasingly similar, and the company's AI features are minimal compared to rivals like Alphabet, Amazon, and Meta Platforms. The Vision Pro virtual reality headset, which was highly anticipated, has not met expectations. As a result, Apple's revenue growth has slowed, and the stock's valuation, with a P/E ratio of 31, seems expensive given its current growth prospects.

In contrast, TSMC and ASML are two companies benefiting immensely from the rising demand for AI. TSMC is a leading manufacturer of computer chips, supplying to companies like Nvidia. It is one of the few companies capable of producing advanced computer chips at scale, making it a critical player in the AI industry. In the last quarter, TSMC's revenue grew by 35% year over year, and it is expected to grow by 36% in 2025. The stock trades at a P/E ratio of 28, which is more reasonable compared to Apple's valuation.

ASML, another key player in the semiconductor supply chain, supplies advanced lithography machines to TSMC and other chip manufacturers. ASML's extreme ultraviolet lithography technology is essential for producing ultrafast computer chips, giving it significant pricing power. In the last quarter, ASML's revenue grew by 46% year over year to $8.38 billion, and it is expected to grow by 20% in 2025. The stock's P/E ratio is similar to Apple's, making it an attractive investment.

Both TSMC and ASML are growing rapidly and are trading at reasonable valuations. Apple, on the other hand, faces increasing competitive risks and potential legal challenges that could impact its earnings power. The company's huge annual payment to Google to be the default search engine on Apple devices may be deemed illegal, and the App Store is now being forced to open up to other payment providers, which could reduce Apple's 30% take rate on mobile purchases.

In conclusion, while Apple has been a stalwart in the tech industry, its growth and innovation have slowed. TSMC and ASML, on the other hand, are well-positioned to capitalize on the AI revolution. Consider selling Apple stock and investing in these two promising AI stocks to gain exposure to cutting-edge technology and ride the AI wave. 

Frequently Asked Questions (FAQS): 

Q: Why is Apple's growth slowing down?

A: Apple's growth has slowed due to the maturing smartphone market, lack of significant innovation in consumer AI, and the underwhelming performance of products like the Vision Pro virtual reality headset. The company's revenue growth is projected to be only 4% this year, primarily driven by software and services.

Q: What makes TSMC a good investment?

A: TSMC is a leading manufacturer of advanced computer chips, which are essential for AI and datacenter applications. The company's revenue is growing at a rapid pace, with a 35% year-over-year increase in the last quarter and an expected 36% growth in 2025. TSMC's stock trades at a reasonable P/E ratio of 28.

Q: How does ASML contribute to the AI industry?

A: ASML is the only company in the world capable of producing extreme ultraviolet lithography machines, which are crucial for manufacturing ultrafast computer chips. ASML's revenue grew by 46% year over year to $8.38 billion, and it is expected to grow by 20% in 2025, making it a key player in the AI and semiconductor industry.

Q: What are the potential risks for Apple?

A: Apple faces several risks, including legal challenges to its App Store policies and the potential illegal status of its annual payment to Google for being the default search engine. These issues could impact Apple's earnings power and market position.

Q: Why should I consider selling Apple and buying TSMC and ASML?

A: TSMC and ASML are growing rapidly and are well-positioned to benefit from the AI revolution. They offer more attractive growth prospects and reasonable valuations compared to Apple, which is facing stagnating growth and competitive risks. Investing in TSMC and ASML can provide exposure to cutting-edge technology and the potential for higher returns. 

More Related Topics :