Is Intel poised for a comeback? Recent rumors of a potential deal with Apple have some investors excited. But before you jump on the Intel bandwagon, consider the powerhouse that already dominates the AI semiconductor landscape: Taiwan Semiconductor Manufacturing (TSMC).
TSMC isn’t just another chipmaker; it’s the undisputed leader, and here’s why you might want to buy it over Intel.
## TSMC: King of the AI Chip Mountain
When it comes to AI processors, TSMC reigns supreme. Estimates suggest they produce a staggering 90% of the world’s most advanced semiconductors. This isn’t a lead built overnight; TSMC has consistently invested in cutting-edge manufacturing technologies, creating a competitive advantage that Morningstar believes could last for two decades. Simply put, competitors like Intel have a long way to go to catch up.
## Riding the AI Wave to Massive Growth
The AI revolution is just getting started, and TSMC is perfectly positioned to benefit. Nvidia’s CEO, Jensen Huang, predicts companies will spend trillions on data centers in the coming years. TSMC is already seeing the impact, with a 30% increase in sales to $33.1 billion and a 39% jump in earnings in the third quarter. Even better, management expects AI data center revenue to continue growing at a compound annual rate in the mid-40% range through 2029.
## Value Alert: TSMC is Undervalued
While Intel’s stock price is soaring on potential, TSMC’s valuation remains attractive. Intel’s shares boast a price-to-earnings ratio of 667, while TSMC’s P/E ratio sits at a much more reasonable 30. Given TSMC’s dominance in AI, its proven track record, and its significantly cheaper share price, now might be the time to consider TSMC.
