Prognostication: The Performing AI Stock Is Anticipated to Surpass Nvidia by the Year 2030
Taiwan Semiconductor Manufacturing Company (TSMC) could be on the verge of a significant growth spurt, akin to Nvidia's meteoric rise, driven by the increasing demand for GPUs and data center capacity from emerging AI applications.
TSMC's strategic position as a crucial foundry and fabrication partner for leading chip designers, including Nvidia and AMD, gives it broad exposure to the rising demand for AI infrastructure chips. This diversified market exposure, rather than dependence on a single product line or company, sets TSMC apart.
The company's advanced chips power AI workloads, benefiting from the broader secular tailwinds driving AI hardware investment. Furthermore, TSMC's rising investments in AI infrastructure fuel demand for semiconductors across the industry, not just GPUs. Its advanced process technologies and extensive capacity are essential for manufacturing a wide range of AI-related chips beyond Nvidia's GPUs.
Another factor contributing to TSMC's potential growth is its more reasonable valuation compared to Nvidia's higher price-to-earnings ratio. This indicates investor recognition of TSMC's stability and broad market exposure, which could lead to stronger long-term returns, especially if Nvidia's growth is constrained by factors like U.S. export restrictions affecting sales in China.
The accelerating growth of data centers and demand for AI computing capacity means TSMC will continue to see increased orders for cutting-edge semiconductor fabs. This, combined with expanding capacities needed to meet demand for increasingly sophisticated chips in GPUs, AI accelerators, and other processor types, further benefits TSMC.
TSMC's technological and manufacturing moat, with leading-edge nodes (such as 3nm and beyond), helps it maintain critical advantages in chip production that few competitors can match. This secures TSMC's central role in the global chip supply chain amid rising AI chip demand.
In contrast to Nvidia, which leverages GPU architecture and software innovation but faces near-term growth headwinds from export restrictions impacting its Chinese market, TSMC's role as a semiconductor foundry supplier places it in a structurally favorable position to benefit from broad growth in AI infrastructure hardware regardless of which chip designs dominate.
As the AI infrastructure wave continues to build, predictions suggest that TSMC's valuation will increasingly become more congruent with the company's growth. With AI development use cases expected to increase, particularly in emerging applications like autonomous driving and quantum computing, TSMC is poised to capitalise on this growth.
Moreover, cloud hyperscalers like Amazon, Microsoft, Alphabet, and Meta Platforms, along with their "Magnificent Seven" peer, are expected to devote over $330 billion on capital expenditures this year for AI data center expansion. This significant investment in AI infrastructure hardware will undoubtedly benefit TSMC, given its essential role in the chip industry.
TSMC's services are considered agnostic in the AI chip market due to its foundry and fabrication services benefiting from broader, secular tailwinds fueling AI infrastructure. As a result, TSMC is seen as a compelling opportunity in the chip space, with some predictions suggesting that its stock will outperform Nvidia by 2030.
The AI infrastructure wave is just starting, with investments in AI infrastructure estimated to reach $6.7 trillion over the next five years. As TSMC continues to capitalise on this growth, it could indeed experience an "Nvidia moment" featuring prolonged, explosive growth.
TSMC's advancements in data-and-cloud-computing technology, as evidenced by its essential role in the manufacturing of AI-related chips and its collaboration with leading chip designers, position it to significantly expand its portfolio beyond GPUs through investing in AI infrastructure. Moreover, the increasing investment in AI infrastructure hardware by cloud hyperscalers, totaling over $330 billion this year, promises to benefit TSMC, underscoring its potential for a growth spurt similar to Nvidia's meteoric rise.
