Embedded Files
Published Date : 31/07/2025
While Nvidia has been the star of the AI revolution, Taiwan Semiconductor Manufacturing (TSMC) is poised to offer even more lucrative gains. Here’s why TSMC is a compelling long-term investment.
While Nvidia has been the star of the AI revolution, Taiwan Semiconductor Manufacturing (TSMC) is poised to offer even more lucrative gains. Here’s why TSMC is a compelling long-term investment.
Nvidia stock has been at the center of the artificial intelligence (AI) revolution for three years, but another chip stock could carry even more lucrative gains in the long run.
When ChatGPT was released to the broader public on Nov. 30, 2022, Nvidia had a market capitalization of just $345 billion. As of the closing bell on July 25, 2025, its market cap had eclipsed $4.2 trillion, making it the most valuable company in the world—by a pretty wide margin, too.
Given these historic gains, it's not entirely surprising that for many growth investors, the artificial intelligence (AI) movement revolves around Nvidia. At this point, the company is basically seen as a barometer measuring the overall health of the entire AI sector.
It's hard to bet against Nvidia, but I do see another stock in the semiconductor realm that appears better positioned for long-term gains. Let's explore what makes Taiwan Semiconductor Manufacturing (TSMC) such a compelling opportunity in the chip space right now, and the catalysts at play that could fuel returns superior to Nvidia's over the next several years.
The AI infrastructure wave is just starting. I like to think of the AI narrative as a story. For the last few years, the biggest chapter revolved around advanced chipsets called graphics processing units (GPUs), which are used across a variety of generative AI applications. These include building large language models (LLMs), machine learning, robotics, self-driving cars, and more.
These various applications are only now beginning to come into focus. The next big chapter in the AI storyline is how infrastructure is going to play a role in actually developing and scaling up these more advanced technologies. Global management consulting firm McKinsey & Company estimates that investments in AI infrastructure could reach $6.7 trillion over the next five years, with a good portion of that allocated toward hardware for data centers.
Piggybacking off of this idea, consider that cloud hyperscalers Amazon, Microsoft, and Alphabet, along with their
Frequently Asked Questions (FAQS):
Frequently Asked Questions (FAQS):
Q: What is the current market capitalization of Nvidia?
A: As of the closing bell on July 25, 2025, Nvidia's market capitalization had eclipsed $4.2 trillion.
Q: How much is expected to be invested in AI infrastructure over the next five years?
A: Global management consulting firm McKinsey & Company estimates that investments in AI infrastructure could reach $6.7 trillion over the next five years.
Q: Why is TSMC considered an agnostic player in the AI chip market?
A: TSMC is considered an agnostic player because its foundry and fabrication services benefit from broader, more secular tailwinds fueling AI infrastructure, regardless of whose chips create the most demand.
Q: What are some emerging applications that will drive demand for GPUs and data center capacity?
A: Emerging applications such as autonomous driving and quantum computing will drive demand for GPUs and data center capacity even further.
Q: What is TSMC's current forward price-to-earnings (P/E) multiple?
A: TSMC's current forward price-to-earnings (P/E) multiple is 25, which is modest compared to Nvidia's forward P/E of 40.
More Related Topics :
More Related Topics :
Page updated
Report abuse