Investing in tech stocks right now can look like a dangerous proposition, given the weakness in the markets of late. If tariffs and trade wars sink the economy into a recession, tech spending could come under pressure, and the growth in artificial intelligence (AI) could slow drastically.
That’s why it’s crucial for investors to pay attention to valuations and buy stocks that aren’t trading at obscene earnings multiples. One stock that AI investors should consider loading up on today is chipmaking giant Taiwan Semiconductor Manufacturing (NYSE: TSM), or TSMC, which has amassed impressive 200% gains over the past five years.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
Here’s why it still looks like a cheap buy right now.
Taiwan Semiconductor’s foundry business makes up around two-thirds of the global semiconductor foundry market. It’s well ahead of the competition, making it highly probable that AI chip designers will continue to rely heavily on its foundry for the foreseeable future. It can benefit from greater economies of scale, putting it in an excellent position to grow and scale while maintaining a high degree of profitability.
Rival Intel has been struggling to provide sustainable, long-term competition, and its foundry business has incurred significant losses. In 2024, they totaled $13.4 billion, which was nearly double the $7 billion loss the foundry unit incurred a year earlier.
Taiwan Semiconductor, meanwhile, expects to generate operating profit margins of around 47.5% in its first-quarter results this year. The company also recently announced plans to invest an additional $100 billion into production in the U.S., on top of the $65 billion it has planned already for manufacturing operations in Arizona. The move could help the company avoid tariffs in the U.S. while also expanding its reach.
TSMC’s stock has seen a massive 200% stock gain over the past five years. Yet, because of the company’s high profit margins and rapid business growth, its price-to-earnings (P/E) multiple has remained relatively low. Currently, the stock trades at a P/E of less than 26, which is incredibly cheap, given that the Technology Select Sector SPDR Fund averages a multiple of 36.
Investors may be discounting the stock due to its Taiwan presence and the risk that could pose from potential tariffs. However, given its dominance in the chipmaking industry and its massive market share, it likely wouldn’t be all that easy for U.S. tech companies to simply use other manufacturers for the sake of getting around any tariffs. Its pivotal role in the industry gives Taiwan Semiconductor a considerable competitive advantage and the potential flexibility to pass on rising costs to its customers.
Taiwan Semiconductor has been a terrific stock to own over the past five years, and with much more growth still on the horizon due to AI, it may not be too late for investors to add this stock to their portfolios. It also looks to be making smart moves, such as investing in the U.S. market, which could help it minimize its risk related to tariffs while also winning over political favor and ensuring it remains a dominant force in the semiconductor foundry market for years to come.
After trading on Tuesday, the stock has fallen 14% since the start of the year, which may be an overreaction to the threat of tariffs. In the long run, Taiwan Semiconductor looks to be a terrific investment to load up on because, for the foreseeable future, tech companies will still need to rely heavily on its foundry business to produce the chips they need for AI.
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of March 10, 2025
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.
—
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact legal@gsix.org
