Tech stocks have been some of the best-performing stocks over the past decade. As a result, eight of the world's 10 most valuable public companies are now tech companies.

Admittedly, 2025 has gotten off to a rough start to 2025 for many of these top companies. Yet it's not time to panic. If anything, this is a time to scoop up some great companies that are trading at relative discounts.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

If you're looking to add tech stocks to your portfolio, consider the following two companies. They're in good positions to return great long-term value.

1. Taiwan Semiconductor Manufacturing Company

Taiwan Semiconductor Manufacturing Company (NYSE: TSM), also referred to as TSMC, is one of the world's most important tech companies. It's the world's largest semiconductor foundry, with a market share in contract chipmaking space of around 67%.

For perspective, the second-largest semiconductor foundry is Samsung, which has a roughly 7% market share.

Instead of designing and producing its own semiconductors for general sale, TSMC manufactures chips on behalf of other companies. They come to TSMC with the designs, and it uses its top-of-the-line manufacturing facilities to bring those products to life. Its success with this model has made TSMC the go-to chip fabricator for well-known companies like Apple, Nvidia, Advanced Micro Devices, and dozens of others.

These high-dollar clients have treated TSMC well, too. In the first quarter, TSMC's revenue increased 35% year over year to $25.5 billion, and its cash from operations increased 43%. Both gains were continuations of impressive runs over the past five years.

TSM Revenue (Quarterly) data by YCharts.

The next few years should be lucrative: Management estimates that TSMC's revenue will grow at a compound annual rate of 20% from 2024 to 2029. If that forecast proves accurate, TSMC will be bringing in well over $200 billion by 2029.

Much of this optimism stems from the surging demand for AI-capable semiconductors as the broader AI boom continues. TSMC's high-performance computing (HPC) segment, which contains its AI-related semiconductors, accounted for 59% of the company's revenue in Q1. In Q1 2024, it was only 46%.

TSMC is in a complex spot geopolitically due both to the tense relationship between Taiwan and China and the ongoing U.S. push to boost domestic manufacturing. How all those issues play out remains to be seen, but TSMC has been proactively expanding its manufacturing footprint in the U.S. to hedge against some of these risks.

2. Alphabet

Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), the parent company of Google, YouTube, Waymo, and others, is one of the world's most valuable companies. However, its stock has been stagnant recently: It's up by less than 1% in the past 12 months (through June 9).

There are several reasons investors seem hesitant about Alphabet, starting with their fears of how recession or economic slowdown would impact its business. Of the $90.2 billion in revenue Alphabet made in Q1, 74% came from advertising. And when the economy is less than ideal or appears to be headed in that direction, advertising is one of the first budget lines that companies cut.

The cyclical nature of Alphabet's business may not be comfortable for investors who prefer more predictable income, but it doesn't take away from the company's long-term value. Alphabet has consistently delivered impressive growth, despite the bumps in the road.

GOOGL Revenue (Quarterly) data by YCharts.

If Alphabet wants to maintain that trend, it will rely a lot on the growth of its cloud service. So far, so good. In Q1, Google Cloud's operating income (profit from core operations) grew 142% year over year to $2.2 billion. This was a significant milestone in the platform's pursuit of sustained profitability.

Another concern among investors is the uncertainty about how Alphabet will fare in the ongoing antitrust cases brought against it by regulators. The final outcomes of these court cases likely won't be clear for years, but Alphabet's diversified business and ability to adapt put it in a solid position.

Trading at just 18.3 times its forward earnings (the S&P 500 is currently around 21.7), there's much more upside to Alphabet's stock than downside. It's a stock I would definitely consider buying at current prices.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $875,479!*

Now, it’s worth noting Stock Advisor’s total average return is 998% — a market-crushing outperformance compared to 174% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Stefon Walters has positions in Apple and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

With the stock market settling in after a volatile period, now is a good time to start looking at some leading growth stocks that have strong potential over the next decade.

Here are five growth stocks across industries that investors can look to hold for the long term.

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 »

1. Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing (NYSE: TSM) is one of the most critical players in the artificial intelligence (AI) boom. As the world's leading contract chip manufacturer, TSMC manufactures the advanced semiconductors powering a range of products from AI infrastructure to smartphones and automotive tech.

Producing these chips isn't easy, as it requires leading-edge technology, precision manufacturing, and scale. Few companies in the world have the capabilities or the track record that TSMC does, and with competitors struggling, it has also garnered strong pricing power.

As such, the company has become the go-to partner for top chip designers, thanks to its leadership in advanced nodes and packaging. Advanced nodes refer to manufacturing processes that allow more transistors to be packed onto a chip, which in turn boosts performance and power efficiency.

Meanwhile, demand for high-performance computing, including AI chips, has exploded. With AI workloads growing, TSMC is expanding capacity alongside key customers to meet future demand.

Despite its pivotal role in the AI supply chain, TSMC's stock still looks reasonably valued. For long-term investors looking to benefit from the continued growth in AI infrastructure and semiconductors in general, TSMC is a great stock to hold.

2. Pinterest

Pinterest (NYSE: PINS) has undergone a quiet but powerful transformation under CEO Bill Ready. Over the past three years, the company has invested heavily in technology to turn its massive user base, which now sits at more than 570 million monthly active users worldwide, into a growth engine. Pinterest is no longer just an online vision board; it's become a shoppable platform with growing ad conversion capabilities.

One of the big drivers behind Pinterest's transformation has been its embrace of AI. The company built a multimodal model trained on both images and text to better understand what users are looking for. This powers personalized recommendations, while a visual search feature makes it easier for users to find and shop for products they see in pinned images. On the backend, meanwhile, its Performance+ platform is giving advertisers the tools to run better campaigns.

The results speak for themselves. Last quarter, Pinterest's revenue jumped 16%. Average revenue per user (ARPU) climbed across all regions, especially outside the U.S., where Pinterest is starting to better monetize users in emerging markets through the help of a partnership with Google.

Pinterest's stock still looks attractively valued, and the company is just scratching the surface of monetizing its user base. With AI-powered tools and a more shoppable platform, Pinterest has solid long-term investment potential.

3. Dutch Bros

Dutch Bros (NYSE: BROS) is shaping up to be one of the most compelling expansion stories in the restaurant space. With just over 1,000 locations across 18 states, the company believes it can more than double its footprint to 2,029 shops by 2029, and it sees the opportunity to eventually support 7,000 coffee shops nationwide.

Meanwhile, its small, drive-thru-focused shops are inexpensive to build, have attractive unit economics, and offer fast payback periods.

What makes the story even more attractive, though, is that Dutch Bros is only now starting to unlock other key growth levers. Mobile ordering, for example, is still early but gaining traction, accounting for only 11% of transactions last quarter. Mobile ordering also feeds into its loyalty program, allowing it to personalize its marketing and promotions.

The company is also leaning into food, testing hot items to drive breakfast sales at a few select locations. Food currently makes up less than 2% of sales, compared to nearly 20% at Starbucks, so there's real upside here. With more menu expansion and store openings on the way, Dutch Bros looks like a long-term winner.

4. Philip Morris International

Philip Morris International (NYSE: PM) is a growth stock in a defensive industry. While many tobacco companies are struggling with declining cigarette volumes in the U.S., Philip Morris doesn't have to worry about that because it doesn't sell cigarettes domestically. Instead, its growth is being driven by its smokeless portfolio, led by Zyn and Iqos, both of which have better unit economics than traditional cigarettes.

Zyn, its fast-growing nicotine pouch, has been its biggest growth driver, as evidenced by U.S. shipment volumes jumping 53% in Q1.

Meanwhile, Iqos, its premium heated tobacco product, continues to gain traction in Europe and Japan, with early success in new markets like Mexico City, Jakarta, and Seoul. In addition, after buying back its U.S. rights from Altria, the U.S. has the potential to be its next big growth driver. At the same time, its traditional cigarette business remains stable overseas, helped by strong pricing power and steady demand.

With strong pricing power, local manufacturing that limits tariff exposure, and growing demand for Zyn and Iqos, Philip Morris looks well positioned to keep delivering strong growth in the future.

5. Eli Lilly

Eli Lilly (NYSE: LLY) has emerged as a leader in the booming GLP-1 drug space, with surging demand continuing to drive strong revenue growth. Last quarter, its two key GLP-1 drugs -- Mounjaro and Zepbound -- generated a combined $6.1 billion in revenue, up sharply year over year. While Zepbound is officially approved by the Food and Drug Administration (FDA) for weight loss in obese adults or overweight adults with at least one weight-related condition, and Mounjaro is approved to help adults with type 2 diabetes, the reality is that the growth of these drugs is being driven by their being prescribed off-label for weight loss.

However, the drug that could be the biggest game changer for Lilly is still on its way. Orforglipron, its first oral GLP-1 drug candidate, recently demonstrated in a phase 3 trial that patients who took the drug lost considerable weight. As an oral medication, it is a much more convenient alternative to injectable GLP-1 drugs, making it especially appealing to patients who are wary of needles.

Orforglipron is also easier to manufacture and distribute than injectable drugs, as it doesn't require cold storage or injection pens. This should help Lilly avoid the supply constraints it saw with its injectable GLP-1 portfolio. With orforglipron looking like it has the potential to be the most potent oral GLP-1 weight loss drug on the market, Lilly is well positioned for continued future growth.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Geoffrey Seiler has positions in Philip Morris International and Pinterest. The Motley Fool has positions in and recommends Pinterest and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Dutch Bros and Philip Morris International. The Motley Fool has a disclosure policy.

Though Apple has been Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) top holding for several years, Warren Buffett has historically avoided tech stocks.

The renowned value investor has said that he can't forecast earnings for tech companies as they are less predictable, due in part to the changeable nature of technology, than other sectors. Buffett has historically preferred to invest in sectors like insurance, banking, utilities, energy, and consumer staples that have predictable cash flows, and whose industries don't change much over time.

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Based on that philosophy, it's not a surprise that Buffett has mostly avoided artificial intelligence (AI) stocks. However, there are some that fit in well with his approach to investing -- buying companies with sustainable competitive advantages at attractive valuations.

Keep reading to see two stocks that fit the bill.

1. Alphabet

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) has one of the strongest economic moats in business history.

Google has had more than 90% market share in the web search industry for the last two decades. The brand is synonymous with search, and underpins Alphabet's larger, highly profitable tech empire that includes products like YouTube, Google Cloud, the Chrome web browser, and "moonshots" like the Waymo autonomous vehicle program.

Google Search has now reached a revenue run rate of $200 billion, and Google Services, of which search makes up most of its business, has an operating margin of more than 40%.

Alphabet is also still delivering steady growth with revenue up 12% in the first quarter.

You might think that a company like Alphabet with evident competitive advantages, solid growth, and massive profits would trade at a premium valuation, but that's not the case. Alphabet currently trades at a price-to-earnings ratio of just 18.6, a substantial discount to the S&P 500.

There are two primary reasons for the discount in valuation.

First, investors are fearful that the company could get broken up or face a substantial fine or a related punishment as it's been found to have a monopoly in both search and adtech. Separately, Alphabet also seems to be trading at a discount because of the risk that its search empire could be disrupted by an AI chatbot like ChatGPT or Perplexity.

While those are risks for Alphabet, shares have long traded at a modest valuation, meaning investors have historically underestimated the stock. Given that, investors may want to borrow from Buffett's mentality and buy Alphabet stock.

2. Taiwan Semiconductor Manufacturing

Berkshire Hathaway invested in Taiwan Semiconductor Manufacturing (NYSE: TSM) in 2022, buying $4.1 billion of the stock, but it sold out of that position completely just two quarters later. It wasn't clear why. It could have been because of the risk of an invasion by China into Taiwan.

Like Alphabet, Taiwan Semiconductor (also known as TSMC) has one of the strongest economic moats in the business world.

The company is the leading third-party semiconductor manufacturer with a market share of more than 50% in contract chips and more than 90% of advanced chips that are crucial for AI.

TSMC is the company that Apple, Nvidia, AMD, Broadcom, and other top semiconductor and tech companies turn to to manufacture their chips. In the first quarter, advanced chip technologies accounted for 73% of its total wafer revenue.

Its technological lead in a highly technical industry with high capital expenditures, and its customer relationships, give the company a significant competitive advantage. TSMC is also growing quickly, with revenue up 35% in the first quarter to $25.5 billion, and its operating margin improved to 48.5%, showing the company has significant pricing power.

Like Alphabet, TSMC is also cheaper than you'd expect for a company that's so dominant. The stock currently trades at a price-to-earnings ratio of 24, which is an excellent valuation for a business growing as fast as TSMC, and one that is a linchpin in the artificial intelligence boom.

It may never be clear why Berkshire Hathaway sold TSMC, but it's not surprising that Buffett's conglomerate bought it. In many ways, it looks like a classic Buffett stock.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Advanced Micro Devices, Broadcom, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Berkshire Hathaway, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

This year has been a strange one for the markets. If you only looked at the S&P 500 (SNPINDEX: ^GSPC) on Jan. 1, lived in a cave for five months, then emerged in June, you would have thought it has been an extremely boring year for the markets. But investors know that's not the case as tariff turmoil has rattled the market, which subsequently caused it to rise when levies were decreased as concessions were made.

Despite all the market turmoil, I still think there are several compelling stocks to invest in during June. My top three are Taiwan Semiconductor Manufacturing (NYSE: TSM), Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), and Nvidia (NASDAQ: NVDA). This trio represents all types of companies in the investment range but is focused on one of the biggest growth trends the market has ever seen: artificial intelligence (AI).

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 »

1. Nvidia

Nvidia has been the name to own since 2023, as its graphics processing units (GPUs) are powering the AI revolution. A GPU's ability to process multiple calculations in parallel sets it apart from other computing methods. Furthermore, connecting thousands of these GPUs in clusters multiplies this effect. Several AI hyperscalers have assembled supercomputers with 100,000 GPUs, allowing them to train AI models rapidly.

Nvidia has made a fortune from these GPUs, and it's not yet done. In Q1 FY 2026 (ended April 28), its revenue rose 69% year over year. Although the U.S. government restricting chip sales meant for China had some impact, it was still an impressive quarter and shows that Nvidia is maintaining its growth rate.

During its 2025 GTC event, Nvidia touted a third-party estimate that stated data center capital expenditures were $400 billion in 2024, but were slated to rise to $1 trillion by 2028. If that prediction comes true, Nvidia's jaw-dropping growth will continue, making this a must-own stock.

2. Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing (TSMC) is a key supplier to Nvidia and many other big tech companies. Its chip fabrication abilities are second to none, which is why most innovative tech companies choose TSMC as their chip fabricator.

TSMC is in a unique and enviable position because it can stay neutral. Since it isn't trying to sell its chips on the market, only its chip-producing abilities, companies that compete with each other are often also TSMC clients. So, as long as the prevailing tech trend is to use increasingly advanced chips and more of them, TSMC will continue to be a winning stock pick.

Additionally, because these chip orders are placed years in advance, management has a great vision of the future. It expects AI-related revenue to grow at a 45% compound annual growth rate (CAGR) for the next five years and overall revenue to increase at a near-20% CAGR. On top of that, TSMC's stock really isn't all that expensive.

TSM PE Ratio (Forward) data by YCharts

With the stock trading for 21.2 times forward earnings compared to the broader market's 22.1 times forward earnings valuation (as measured by the S&P 500), TSMC offers an excellent combination of growth and value.

3. Alphabet

Alphabet is more on the value side of the investment spectrum, although it also provides excellent growth. In Q1, Alphabet's revenue rose 12% while diluted earnings per share rose 49%. If all you do is read news headlines about Alphabet's stock, then you may be shocked to find that the company is still doing excellent despite increasing headwinds.

Alphabet faces three primary headwinds:

1. Artificial intelligence taking over its search business.
2. An economic slowdown harming advertising sales.
3. A potential government breakup.

It's hard to predict the third headwind, as it will still be years before investors know what will happen with Alphabet's business. There are many appeals processes and settlements to be reached, and I'm ignoring that possibility right now. However, if you're uncomfortable with ignoring the impending government action, that's also OK.

Economic slowdowns happen occasionally, and Alphabet has always bounced back stronger after each slowdown, so this is only a short-term tailwind (if it occurs at all).

Lastly is AI taking over search. This is a real threat, but management has already implemented an AI search overview on Google and launched an AI mode. Furthermore, Google Search's revenue increased by 10% during Q1. If there were serious problems stemming from generative AI threats, observers likely would have seen some weakness, as widespread generative AI use has been occurring for nearly three years.

Alphabet is still doing fine as a company, yet the stock trades for less than 18 times forward earnings due to various fears surrounding it. I think now represents an excellent buying opportunity, and investors should be scooping up shares of this value play in June.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $828,224!*

Now, it’s worth noting Stock Advisor’s total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keithen Drury has positions in Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

The market is a forward-looking machine, so knowing where a stock is heading is key to investing success. While price targets are always estimates, it's good to know your acceptable rate of return for an investment. That way, you'll know if your stock-picking process is working.

One stock that I'm extremely confident in is Taiwan Semiconductor (NYSE: TSM). I'm confident that this stock will not only beat the market over the next five years, it will crush it. But where did I get my estimate of a 129% gain in five years? It's fairly obvious when you listen to management speak.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Taiwan Semiconductor is a valuable partner for many companies

Taiwan Semiconductor is the world's largest chip foundry. Its clients are among the biggest tech companies in the world, including Apple (NASDAQ: AAPL) and Nvidia (NASDAQ: NVDA). When you hear about companies like these two designing their own chip, they are designing it, but the manufacturing process is most likely farmed out to TSMC. This is a great relationship, as big tech companies don't need to maintain expensive facilities and employ thousands of workers whose only expertise is chip production.

In return, TSMC provides best-in-class technology and execution. Right now, TSMC can produce 3nm (nanometer) chips, which few other foundries can. It's also working toward 2nm chips slated to be launched later this year and 1.6nm chips for 2026. TSMC has cemented itself as a great partner by continuously innovating and offering cutting-edge technology.

Because chip orders are often placed years in advance, TSMC's management has unparalleled insight into the company's future. So, when it speaks, investors should listen. Over the next five years, management expects AI-related revenue to grow at a 45% compound annual growth rate (CAGR), with overall revenue nearing a 20% CAGR. That's strong growth, but what does that mean for the stock?

Taiwan Semi's stock rise will be tied to business performance

At the end of 2024, Taiwan Semiconductor produced $90.1 billion in revenue. If TSMC produced an 18% growth rate (near 20% as management has guided for), that figure would rise to $206 billion -- a 129% rise. That's well over a double in under five years. As long as TSMC can maintain its margins and isn't valued at an absurd starting valuation, assuming that its stock price will increase by a similar amount is not unreasonable.

Because Taiwan Semi is a sole source supplier for many of these companies, it's unlikely that it will need to compress its margins over the next few years. However, tariffs could shake up this assumption if its customers are unwilling to absorb some of the costs. One thing to note is that semiconductors are currently exempt from "reciprocal" tariffs, although U.S. President Donald Trump has stated that this arrangement will be revisited. Taiwan Semi has already gotten ahead of this threat, announcing a $100 billion investment to increase manufacturing capabilities in the U.S.

While some say this $100 billion investment equals being strong-armed by Trump, both TSMC's CEO and Taiwan's president have denied this, pointing to the fact that TSMC's existing Arizona production facility has sold out capacity through 2027. Regardless, Trump's getting what he wanted by moving more production stateside.

Furthermore, the $100 billion investment won't affect Taiwan's income statement. That expense is only recognized through depreciation in subsequent years. One area that might take a hit is its operating expenses, as TSMC will have to hire staff before actual chip production, which will decrease its margins. However, that factor will eventually disappear once the production facilities are up and running.

As a result, TSMC's profit margin may dip within the five-year timeframe, but it should return to its current levels by the end.

Moving to valuation, Taiwan Semi's stock trades at almost exactly its five-year average price-to-earnings (P/E) level.

TSM PE Ratio data by YCharts.

This gives me confidence that TSMC's stock isn't overpriced at these levels, and that any future growth will not be due to earnings expansion.

Taiwan Semiconductor is in an excellent position to capitalize on the AI boom and many other technological trends. Management has a great view of the future of chip demand, which leads me to believe that Taiwan Semiconductor's stock can more than double over the next five years.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $635,275!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,385!*

Now, it’s worth noting Stock Advisor’s total average return is 967% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 12, 2025

Keithen Drury has positions in Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Although the market had a strong week, plenty of stocks still look like phenomenal buys. I'm focusing on three right now: Nvidia (NASDAQ: NVDA), Taiwan Semiconductor (NYSE: TSM), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

Although each of these stocks may have rallied over the past week, their gains will be nothing compared to the long-term stock performance that's in store for this trio.

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 »

1. Nvidia

Nvidia makes graphics processing units (GPUs), which are widely deployed in applications that require significant computing power, such as artificial intelligence (AI) model training. Nvidia's market share in the data center GPU market is astonishing, with most estimates pegging Nvidia's market share above 90%.

Additionally, over the past 12 months, Nvidia has generated $115 billion in sales from its data center division. Considering that Nvidia's overall revenue over the past 12 months was $130.5 billion, Nvidia's performance is heavily tied to data center buildouts.

While some investors are worried that data center buildouts may slow, all big tech companies have committed to record-setting capital expenditures in 2025, most of which will be deployed in data center builds.

A third-party estimate Nvidia cited stated that data center buildouts totaled $400 billion in 2024. However, that figure is expected to rise to $1 trillion by 2028. That's incredible growth, and if it turns out to be true, there's still massive upside for Nvidia's stock if it maintains its market share dominance.

This is still the early innings of AI deployment and workload migration to the cloud. As a result, there's still a ton of data center capacity to build, which is excellent news for Nvidia. With that in mind, Nvidia is a stock that I want to buy and hold for years to come.

2. Taiwan Semiconductor

Taiwan Semiconductor (or TSMC) makes chips for Nvidia and nearly every other big tech company. These clients can't manufacture their own semiconductors, so they farm out that work to foundries like TSMC. Nobody has the long-term history of continuous innovation and execution like this company, so it has cemented its place as a valuable partner for these companies for the foreseeable future.

Management is incredibly bullish on the future. They expect AI-related revenue to grow at a 45% compound annual growth rate (CAGR) over the next five years, with overall company revenue increasing at nearly a 20% CAGR. Many companies place chip orders years in advance, so when TSMC's management speaks about future growth, investors would be wise to listen.

However, one glaring issue with TSMC is that most of its fabrication facilities are outside U.S. borders, making it a potential target for Trump administration tariffs. While this is a valid concern, investors must be aware of other issues.

First, semiconductors are currently exempt from reciprocal tariffs. Second, TSMC management unveiled plans to invest $100 billion in chip production facilities in the U.S. This may be key to staying out of the crosshairs of a tariff, as President Donald Trump's ultimate goal is to increase domestic chip production capacity.

The growth that TSMC is expected to put up is undeniable, and with the ball rolling toward getting more U.S. capacity up and running, tariffs aren't as much of a concern.

3. Alphabet

Last is Alphabet, which is trading for an absurdly low price tag. At just 17 times forward earnings, Alphabet's stock is among the cheaper stocks in the market.

GOOGL PE Ratio data by YCharts

There are multiple reasons for Alphabet's cheap price tag. First, Alphabet's primary business is advertising, which tends to be negatively affected when the economic outlook is uncertain or negative. Second, investors are worried that Alphabet's primary cash cow, the Google search engine, could be replaced by generative AI models. Last, Alphabet has been found guilty of operating an illegal monopoly in its search engine and advertising platform businesses.

That's not a great setup for Alphabet's stock, and the market is assuming the worst-case scenario outcome for all three of these problems. I think that's the wrong way to view the stock, as advertising revenue always comes back following a downturn.

Alphabet is already integrating AI summaries into its Google search results, and the court case could take years to wrap up. When all these factors are considered, I think the pessimism is excessive, and investors are ignoring a great business that's still growing at a double-digit pace.

As a result, I think investors are fine with taking a position in Alphabet here, as the pessimism is far too great.

Don’t miss this second chance at a potentially lucrative opportunity

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:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $349,648!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $40,142!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $635,275!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.

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*Stock Advisor returns as of May 12, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keithen Drury has positions in Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Many investors are watching large tech companies invest massive capital into artificial intelligence (AI) infrastructure. The big question is when, or even if, there will be an adequate return on those investments.

There are even concerns that massive capital allocation plans already announced may be cut or pushed out. But there are more and more signs that spending is continuing and even accelerating. If that indeed remains true, two of the biggest beneficiaries of that spending are no-brainer stocks to buy right now.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

"A ton" of AI data center demand

Currently, one of the main recipients of that capital is Nvidia (NASDAQ: NVDA). Its high-end chips are filling server stacks in many data centers being built globally. As a result, the AI boom has been of game-changing benefit to Nvidia and its investors. The stock has been under pressure, though, as questions surface about demand from a slowdown in AI infrastructure spending, and regulatory headwinds in the form of export restrictions.

The concerns related to capital spending may be overblown. Jonathan Gray, chief operating officer of asset manager Blackstone, recently told CNBC: "I think this trend is powerful. I think it will continue...overall, we still see a ton of demand." That's great news for Nvidia investors and supports what large Nvidia customers like Meta Platforms, Microsoft, and Amazon have been saying about maintaining, or even growing, their capital spending plans.

Export curbs could be more problematic for Nvidia. Management already said Nvidia plans to take $5.5 billion in charges after the Trump administration declared limits to exports and required licensing for Nvidia's H20 AI chip sales to China. That chip was a modified product created specifically to comply with previous regulations for China shipments.

The China picture might be improving

China is an important market for Nvidia. Concerns surrounding that business are a big reason why Nvidia shares have declined this year. Sales there represented 13% of total revenue last year. That was down from 17% in the prior fiscal year, though, showing that Nvidia isn't overly reliant on Chinese customers.

Recent reports say that President Donald Trump may even be ready to relax AI chip export curbs, too. Just as Biden-era export restrictions are getting ready to go into effect, Trump reportedly will overturn those rules. Potential rules and regulations going forward remain unclear, but the effect on Nvidia's business may already be priced into the stock.

The takeaway is that investing in the AI leader should still make sense, especially as the stock has pulled back this year. With Nvidia's business still flourishing, investors could also look to its biggest supplier for a winning investment right now.

Another global AI leader

Taiwan Semiconductor (TSMC) (NYSE: TSM) also considers Nvidia one of its most important customers. TSMC supplies semiconductor products, including microprocessors, graphics processing units (GPUs), microcontrollers, and other specialty and advanced technology packages. Nvidia is one of several big tech companies reliant on TSMC, but the Taiwan-based company has a diverse customer base. It supplied products to more than 500 customers last year.

Demand for its services is surging. Revenue soared 42% in the first quarter, and profits surged even more. Net income and diluted EPS (earnings per share) soared 60% year over year. That rapid growth is expected to continue. Management expects year-over-year revenue to jump another nearly 40% in the current quarter.

Yet, as with Nvidia, investors have pushed TSMC shares down by more than 10% year to date. That's led to a very desirable valuation. The stock now trades at a forward price-to-earnings ratio below 20.

Nvidia and TSMC stocks have both been beaten down due to concerns about slowing growth. Yet based on customer demand and tech companies' recent comments, the rise in AI development has not become a bubble. Even if capital spending on data center buildouts does slow, that doesn't present the full picture either. AI also includes software that is likely going to run in almost every device for both consumers and many enterprises.

Taking that broader view should make most investors comfortable owning both Nvidia and TSMC at recent valuations.

Don’t miss this second chance at a potentially lucrative opportunity

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:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $302,503!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $37,640!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $614,911!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.

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*Stock Advisor returns as of May 5, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Howard Smith has positions in Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Amazon, Blackstone, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Semiconductors are in everything from cars to computers, and many devices have far more than just one. President Trump recently said that tariffs on semiconductors are coming "in the very near future." That threat has sent tech companies scurrying to find solutions that will lessen the potential blow to their businesses.

New research from The Motley Fool shows that the U.S. is vastly intertwined with countries including China, Taiwan, Singapore, and many others in global semiconductor supply chains, which complicates any future chip tariffs. Here are two companies you should keep an eye on if semiconductor tariffs come to pass.

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 »

1. Taiwan Semiconductor

Semiconductor-specific tariffs could deal a significant blow to Taiwan Semiconductor (NYSE: TSM), also known as TSMC. The company is the largest manufacturer of processors in the world -- making processors for Apple (NASDAQ: AAPL), Nvidia, and Qualcomm -- and makes an estimated 90% of the world's most advanced processors.

If the Trump administration were to enact tariffs on processors, it would likely increase the cost of production for TSMC and cause the company to raise prices for its customers, which in turn would cause prices to increase for the many products TSMC's chips are in.

In response to questions about tariffs on the company's first-quarter earnings call in mid-April, Taiwan Semiconductor CEO C.C. Wei said, "We understand there are uncertainties and risks from the potential impact of tariff policies. However, we have not seen any change in our customers' behavior so far. Therefore, we continue to expect our full year 2025 revenue to increase by close to mid-20s percent in U.S. dollar terms."

For now, TSMC has committed to investing $165 billion in the U.S. to increase chip production for customers. The company said on the call that the investment comes as demand for U.S. customers increases, but the result of having a new plant could also help offset potential tariff costs in the future.

Still, the company has acknowledged that the threat of new semiconductor tariffs could bring "uncertainties and risks," and that TSMC will have a clearer picture of any impact in the second quarter.

2. Apple

Apple is already feeling the effects of tariffs, with $900 million in additional costs in the most recent quarter because of current tariffs, and said that higher costs could be on the way. Some analysts think tariffs could eventually cost Apple more than double what it already has in each quarter.

And that's before any semiconductor tariffs. If those come soon, then the pain will likely be ratcheted up as Apple receives chips from Taiwan, South Korea, Japan, and Singapore. Those chips then go into the company's phones, computers, tablets, smartwatches, and AirPods.

Tariffs on processors could cause the price of an iPhone to go up so that Apple can maintain the high margins it typically receives from its products. It might also take on some of the cost itself to offset the impact on consumers.

While there's still plenty of uncertainty around tariffs, Apple appears to be planning for any potential impact from chip tariffs by sourcing more semiconductors from U.S. plants. CEO Tim Cook said on Apple's recent earnings call, "During calendar year 2025, we expect to source more than 19 billion chips from a dozen states, including tens of millions of advanced chips being made in Arizona this year."

Apple also committed to spending $500 billion in the U.S. over the next four years, part of which will go to expanding TSMC's semiconductor manufacturing in Arizona.

But don't get your hopes up just yet for Apple. Cook also said on the earnings call, "I don't want to predict the future because I'm not sure what will happen with tariffs." He added that he's having a difficult time seeing beyond June.

A lot of uncertainty right now

Both of these companies are tech leaders in their respective markets, but each faces a lot of tariff uncertainty right now. Keep that in mind if you're considering buying Taiwan Semiconductor or Apple.

The tariff situation doesn't mean investors should avoid these stocks entirely, but it might be a good idea to take a wait-and-see approach with both if you're considering buying right now.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $623,103!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $717,471!*

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*Stock Advisor returns as of May 5, 2025

Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Apple, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Although the market is starting to trend up a bit from its recent lows, nothing is stopping another announcement from the White House or Federal Reserve that could crash the market again. You should keep a short list of stocks you'd scoop up during a market crash, so you're ready to act when it happens.

Two stocks at the top of my shopping list are Nvidia (NASDAQ: NVDA) and Taiwan Semiconductor Manufacturing (NYSE: TSM). If we see another big drop, these will be among my first purchases.

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 »

Nvidia

Nvidia makes graphics processing units (GPUs), the computing muscle behind most of the artificial intelligence (AI) models we use. Nvidia dominates this market, with many estimates putting its market share at more than 90%. Buying dominant companies in critical industries is a smart investing strategy, which is exactly why Nvidia is at the top of my shopping list.

Right now, we're in a multi-year buildout cycle with massive demand for Nvidia GPUs. Third-party data used by Nvidia estimates that data center capital expenditures reached $400 billion in 2024 and could rise to $1 trillion by 2028. Part of the market is still a bit pessimistic and thinks this spending spree will slow down if trade wars ramp up.

But all of the language of Nvidia's largest clients on their conference calls seems to indicate that it's full speed ahead for data center spending.

I don't think investors need to wait for a market crash to buy Nvidia's shares, as they are currently down around 25% from their all-time high. The stock is also trading at the lowest forward price-to-earnings ratio it has seen in over the past year, which should excite investors even more. At its current level, it only trades for a slight premium over the S&P 500, which is valued at around 21.1 times forward earnings.

NVDA PE Ratio (Forward) data by YCharts

Nvidia is still a smart buy today, but if the market crashes, it'll be one of my first purchases.

Taiwan Semiconductor

Similarly, Taiwan Semiconductor is in great shape to take advantage of the chip boom caused by AI. Taiwan Semi is the world's largest chip manufacturer and holds contracts with several big tech companies (like Nvidia) that can't fabricate chips themselves. Many of these companies place their chip orders years in advance, so investors should listen when TSMC's management makes a projection about the chip market.

Over the next five years, management expects AI-related revenue to expand at a 45% compound annual growth rate (CAGR). Its projection for overall company revenue is a CAGR of nearly 20%, or an increase of nearly 148% over those five years. TSMC recently gave investors even more confidence when its CEO, C. C. Wei, made this comment during its Q1 earnings report:

We understand there are uncertainties and risks from the potential impact of tariff policies. However, we have not seen any change in our customers' behavior so far. Therefore, we continue to expect our full-year 2025 revenue to increase by close to mid-20s percent in US dollar terms.

That's great news for shareholders, but there's still some fear that a future tariff announcement specifically targeting semiconductors could be coming. Regardless of whether one comes or not, TSMC's chips are vital to nearly every high tech device out there, and it's a cost that must be absorbed. As a result of this fear, the stock is still relatively cheap.

TSM PE Ratio data by YCharts

With the stock trading for under 19 times forward earnings, I think it's still an excellent buy at these levels, and investors should scoop up shares while they're still cheap.

Don’t miss this second chance at a potentially lucrative opportunity

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:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $303,566!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $37,207!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $623,103!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.

See the 3 stocks »

*Stock Advisor returns as of May 5, 2025

Keithen Drury has positions in Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Taiwan Semiconductor Manufacturing (NYSE: TSM) stock is declining in Monday's trading following potentially significant news about competitive dynamics in the semiconductor industry. The company's share price was down 1.4% as of 3:30 p.m. ET and had been off as much as 2.8% earlier in the session.

TSMC's valuation is moving lower today following news that Chinese tech giant Huawei is testing an artificial intelligence (AI) chip that could rival Nvidia's top semiconductors. Nvidia relies on TSMC to fabricate its semiconductor designs, and both companies occupy key positions in the broader AI hardware and tech race between the U.S. and China.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

TSMC stock slumps on Huawei AI news

Restrictions put in place by the U.S. officially bar Nvidia's high-end processors and advanced chips manufactured by TSMC from being sold into the Chinese market, but Huawei could be poised to give China a major step forward in the AI race with its new Ascend 910D processor.

The Wall Street Journal recently reported that Huawei is teaming up with tech-industry partners to test the new chip. Huawei reportedly expects the performance of the Ascend 910D to exceed that of Nvidia's H100 processor. Meanwhile, Reuters reported that Huawei could be ready to begin shipping its Ascend 910C AI processor to customers in May.

What's next for TSMC?

Huawei's new chip designs are being fabricated by Semiconductor Manufacturing International (SMIC) -- China's largest chip foundry. If SMIC is able to deliver strong production yields on chip designs from Huawei that match or exceed some of Nvidia's powerful AI processors, it would mark a major shakeup in the AI market.

While the H100 chip isn't Nvidia's strongest AI hardware, it's still a very powerful chip, suitable for a wide range of applications. TSMC still retains a significant lead when it comes to advanced chip foundry services, but investors will be watching closely to see if SMIC is catching up.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

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See the 10 stocks »

*Stock Advisor returns as of April 28, 2025

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

In today's video, I discuss Nvidia (NASDAQ: NVDA), Broadcom (NASDAQ: AVGO), and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG). To learn more, check out the short video, consider subscribing, and click the special offer link below.

*Stock prices used were the market prices of April 25, 2025. The video was published on April 25, 2025.

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 »

Don’t miss this second chance at a potentially lucrative opportunity

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:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $287,877!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $39,678!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $594,046!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.

See the 3 stocks »

*Stock Advisor returns as of April 28, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Jose Najarro has positions in Alphabet and Nvidia. The Motley Fool has positions in and recommends Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy. Jose Najarro is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

Nvidia (NASDAQ: NVDA) has been notorious for being a high-growth, highly valued stock since its run began in early 2023. However, that's no longer the case using this one common and important evaluation metric. Now, it's nearly the same price as the S&P 500 (SNPINDEX: ^GSPC), which is an odd thing to say considering how much growth Nvidia is expected to put up over the next few years.

However, this metric has one important consideration, and it could be giving investors false hope.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

The forward price-to-earnings metric is useful if you understand its nuances

The valuation metric that I most like to use -- and the one that's relevant in this discussion -- is the forward price-to-earnings (P/E) ratio. By definition, forward earnings haven't been achieved yet; they're just projections. As a result, they are inherently flawed because these predictions rarely come true. Furthermore, because the forward P/E ratio uses multiple analyst projections to come up with an average value, not every one of them can be right. But the average of all of them gives investors an idea of where the company's earnings could be heading, which is important considering how the market works.

The market isn't a rearward-looking entity. If it were, then tariff concerns wouldn't affect the stock market because it would only be looking at the past when tariffs weren't an issue. This is why the trailing P/E ratio is somewhat irrelevant (in my opinion) because it looks at where the stock has been, not where it's going. Still, the trailing P/E ratio can be a useful metric in conjunction with the forward P/E, as investors need to make sure earnings aren't going to fall off a cliff in future quarters.

The forward P/E ratio is especially useful for high-growth companies like Nvidia, as valuing it on trailing earnings when monster growth is expected in the next few quarters isn't a wise move. From this standpoint, Nvidia has nearly reached the same level as the S&P 500.

NVDA PE Ratio (Forward) data by YCharts

At 22.4 times forward earnings, Nvidia is only slightly more expensive than the S&P 500's 19.8 times forward earnings valuation. This is despite the fact that Wall Street analysts project 54% revenue growth in FY 2026 (ending January 2026) and 23% growth in FY 2027.

However, this price could be artificially low, as analysts might be waiting for Nvidia to report first quarter earnings before adjusting their projections. There are plenty of fears surrounding Nvidia, especially with tariffs looming. But is this enough to avoid the stock?

Reports are mixed on chip demand

Nvidia's graphics processing units (GPUs) have become the go-to computing components for training and running AI models. As more computing power is needed for these models, Nvidia will sell more. However, some AI hyperscalers have been slowing their data center expansion plans. None of these reports jive with what their management said just a few weeks ago, and they don't fit with what critical supplier Taiwan Semiconductor (NYSE: TSM) stated.

In TSMC's Q1 results, its CEO noted, "We understand there are uncertainties and risks from the potential impact of tariff policies. However, we have not seen any change in our customers' behavior so far." Nvidia uses TSMC's foundry to produce its chips, which clearly indicates that Nvidia hasn't canceled a bunch of its chip orders from TSMC yet.

That doesn't mean there won't be a slowdown, but the market is currently assuming the worst-case scenario for Nvidia's business, which is why the stock is down so much. As a result, I think right now represents an excellent buying opportunity, as long as you can stay patient with the stock for three to five years. If you can, there's a high probability that Nvidia will crush the market over that time frame.

Don’t miss this second chance at a potentially lucrative opportunity

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:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $276,000!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $39,505!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $591,533!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.

See the 3 stocks »

*Stock Advisor returns as of April 21, 2025

Keithen Drury has positions in Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Taiwan Semiconductor Manufacturing (NYSE: TSM), popularly known as TSMC, has turned out to be a solid investment over the past five years. Shares of the foundry giant have jumped an impressive 182% during this period, easily outpacing the 83% gains clocked by the S&P 500 index.

However, the broader stock market sell-off has weighed on TSMC stock so far this year. The foundry specialist has lost 25% of its value in 2025 even though it has delivered a couple of solid quarterly results thanks to the outstanding demand for the chips it manufactures. But the drop in TSMC stock this year is a window of opportunity for investors looking to add a long-term winner to their portfolios.

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 »

That's because TSMC is one of the best ways to benefit from the secular growth of the semiconductor market. Let's look at the reasons why buying TSMC stock for the next five years could turn out to be a smart move.

The chip market is set for solid growth over the next five years

The global semiconductor industry generated $628 billion in revenue in 2024, clocking 19% growth from the previous year, as per the Semiconductor Industry Association. It is expected to grow by double digits in 2025 as well, driven by the growing demand for chips in various applications such as communications, artificial intelligence (AI), defense, transportation, medical devices, and others.

These growth drivers are expected to send the global semiconductor industry's revenue to $1 trillion in 2030, according to market research firm Yole Group. More optimistic estimates project the semiconductor market to hit almost $1.5 trillion in revenue by the end of the decade. These estimates bode well for TSMC as it is the world's biggest semiconductor foundry with a market share of 67%.

The company's chip fabrication plants are used by more than 500 customers for manufacturing close to 12,000 products. They serve multiple end markets ranging from automotive to consumer electronics to smartphones to high-performance computing, among others. It makes chips for top companies such as Apple, Nvidia, AMD, Qualcomm, Broadcom, Sony, Samsung, and MediaTek.

These customers are dominant players in their respective industries. Importantly, all of them have been lining up to manufacture chips using TSMC's advanced process nodes. Apple, for instance, reportedly plans to deploy chips manufactured on TSMC's 2-nanometer (nm) process node in its 2026 iPhones, while AMD, Intel, and Broadcom are also expected to adopt this process node to manufacture AI accelerators.

Meanwhile, Nvidia is expected to manufacture next-generation AI chips using the 2nm process node. TSMC's 2nm chips are expected to hit mass production in the second half of the year. The company is reportedly enhancing its 2nm manufacturing capacity, with production projected to reach 50,000 wafers per month by the end of 2025 before eventually jumping to 80,000 wafers a month.

What's more, TSMC expects to manufacture 30% of its 2nm chips in the U.S., which is why it is going to speed up the construction of its facilities in Arizona. It is worth noting that TSMC got 22% of its total revenue from selling 3nm chips in the first quarter of 2025, up from just 9% in the year-ago period. The revenue share of 5nm chips fell by a percentage point to 36% in Q1.

The stronger adoption of the 3nm chips can be explained by the 15% performance gains and 30% to 35% power efficiency gains they deliver over the 5nm process node while being smaller in size. The 2nm chips, meanwhile, are expected to deliver similar gains over the 3nm process node, which explains why TSMC is anticipating solid demand for this manufacturing process.

After all, major chipmakers and consumer electronics companies that TSMC serves are looking to reduce power consumption and the size of chips while achieving higher computing performance. This can be achieved by shrinking the size of the chips and packing more transistors into a smaller area. TSMC has been ahead of its rivals in shrinking the size of its chips, and that trend is expected to continue with 2nm.

That's because Samsung's power efficiency gains while moving from 3nm to 2nm are expected to be smaller than TSMC at 25%, which should ideally allow the latter to maintain its technology lead. As a result, don't be surprised to see TSMC gain a bigger share of the foundry market. The company gained 6 percentage points of market share in 2024, while Samsung's share slipped by 3 percentage points to just 11%.

The potential advantage of the 2nm process node could help TSMC widen that already impressive gap further. As a result, TSMC could corner a bigger share of the semiconductor foundry market by 2030, which is expected to generate almost $217 billion in revenue after five years.

However, the company's revenue opportunity doesn't end here -- it is targeting the lucrative advanced chip packaging market as well under its Foundry 2.0 strategy. The overall Foundry 2.0 market, which includes both chip manufacturing and packaging, is expected to hit $298 billion in revenue this year, according to IDC. The market research firm anticipates this market to grow at an annual rate of 10% for the next five years.

IDC expects TSMC's share of this market to increase to 37% in 2025. The discussion above suggests that it could end up cornering a bigger share of this lucrative market over the next five years, and that could translate into healthy stock market gains.

How much upside could TSMC deliver?

A 37% share of the Foundry 2.0 market this year would bring TSMC's 2025 revenue to around $110 billion (based on IDC's $298 billion revenue estimate). However, analysts have increased their growth expectations for the current year and are expecting its bottom-line growth to pick up.

TSM Revenue Estimates for Current Fiscal Year data by YCharts

The improved outlook could be attributed to the company's stronger position in the advanced chip manufacturing market, which is witnessing solid growth thanks to applications such as AI. If the Foundry 2.0 market indeed grows at 10% a year for the next five years (as per IDC's estimate), it could generate $480 billion in revenue at the end of the forecast period.

Assuming TSMC's Foundry 2.0 market share grows further and it manages to capture even 45% of this space after five years, its revenue could hit $216 billion. That would be double the revenue it is expected to generate this year. Multiplying the projected revenue after five years with the company's five-year average sales multiple of 9 points toward a market capitalization of $1.94 trillion.

That would be 2.5 times TSMC's current market cap, indicating that this semiconductor stock could continue delivering healthy gains over the next five years as well.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Intel, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.

There is a lot of speculation about the effects of President Donald Trump's tariff plans, but none have been seen yet, as many companies are still sorting through how they will be affected. As first-quarter results roll out, you'll get more commentary on how tariffs will affect various businesses, but one very important company has already offered commentary on tariffs.

Taiwan Semiconductor (NYSE: TSM) is one of the world's most important companies, as it is the chip foundry for many of the world's top companies. It made a comment on tariffs that will likely shock readers, and all investors should heed its CEO's words.

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TSMC's CEO is bullish on the rest of 2025

Taiwan Semiconductor is one company that could be affected by tariffs, as most of its chips are made in Taiwan. While TSMC has built a plant in Arizona and announced a $100 billion investment to build more facilities in the U.S., the vast majority of its production is overseas.

On another note, TSMC's chips haven't yet been slapped with a huge tariff rate. Semiconductors are currently exempt, but President Trump has noted that there will be an upcoming semiconductor tariff. Regardless, the possibility of tariffs affecting demand for its chips hasn't been felt yet, which is why TSMC's CEO C.C. Wei had this to say on the company's recent Q1 conference call:

We understand there are uncertainties and risks from the potential impact of tariff policies. However, we have not seen any change in our customers' behavior so far. Therefore, we continue to expect our full year 2025 revenue to increase by close to mid-20s percent in U.S. dollar terms.

So, TSMC hasn't seen any effects of tariffs. Let's see how that shakes out if a semiconductor-specific tariff is announced, but it's business as usual for Taiwan Semiconductor as of right now. This likely isn't the case for every company, so this speaks to Taiwan Semi's strong position.

Despite its strong growth outlook and lack of tariff effects, the stock has been heavily sold off, which allows investors to scoop up shares for a steal.

The stock still hasn't reacted to the news

Despite strong Q1 results, Taiwan Semiconductor still trades like its business is about to fall off a cliff due to tariff effects.

TSM PE Ratio data by YCharts

Nineteen times trailing earnings and 16 times forward earnings is a dirt-cheap price tag for one of the world's most important companies, especially when it projects that 2025 revenue will increase in the mid-20% range.

This stock looks even cheaper when you compare Taiwan Semiconductor to the broader market, as measured by the S&P 500 (SNPINDEX: ^GSPC). The market trades for about 21.4 times trailing earnings and 19.8 times forward earnings, which is far more expensive than TSMC's stock in both cases.

The CEO of this company, who is much better connected in the tech world than almost anyone else, just told investors that the company hasn't felt any tariff impacts and doesn't anticipate any. However, the stock hasn't recovered from this sell-off and continues to move lower even after his optimistic statements. This clearly indicates that it's a great buying opportunity for the stock, and I think it's among the best buys in the market right now.

Even if a semiconductor tariff slightly affects TSMC's demand, it's still the most important chip foundry in the world, and its steps to move some production to the U.S. will benefit it. Thanks to AI, there's just too much growth in the chip industry, and Taiwan Semiconductor is one of the best ways to invest in this trend.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $566,035!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $629,519!*

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Keithen Drury has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

The $1 trillion stock club has been getting a bit thinner amid the stock market sell-off, as a handful of companies have fallen out of this prestigious club. At this writing, there are only eight companies with a $1 trillion valuation worldwide, but two more could easily join their ranks over the next few months if the market recovers.

Taiwan Semiconductor (NYSE: TSM) and Broadcom (NASDAQ: AVGO) are two companies that are destined to join the $1 trillion valuation club. Each has already reached that threshold but is currently on the outside looking in thanks to the sell-offs.

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These two companies will be OK over the long term and will likely rejoin the $1 trillion club either this year or next. Here's a closer look.

1. Taiwan Semiconductor

Broadcom and TSMC aren't that far away from joining the $1 trillion club, as Broadcom and TSMC are currently valued at around $800 billion and $770 billion, respectively. That's still a 25% increase from today's level to get to $1 trillion, so if these stocks can do that in short order, they could be fantastic stocks to buy right now.

TSMC is the world's largest chip foundry. It makes chips for its clients who cannot do so themselves. These include companies like Nvidia (NASDAQ: NVDA), Apple (NASDAQ: AAPL), and Broadcom. By staying neutral in the chip production world, Taiwan Semiconductor isn't competing against its clients, which is why it has grown to become the top option in the foundry space.

Another reason it is near the top is its drive to offer the most advanced technology. Currently, TSMC's most powerful chip is the 3 nanometer (nm) variety, which means chip traces are spaced at a minimum of 3 nm apart. However, it's slated to launch 2 nm and 1.6 nm chips this year and next, which represent improvements over current technology.

As for tariffs, Taiwan Semi's CEO recently made this comment:

We understand there are uncertainties and risks from the potential impact of tariff policies. However, we have not seen any change in our customers' behavior so far. Therefore, we continue to expect our full year 2025 revenue to increase by close to mid-20s percent in U.S. dollar terms.

This is an extremely bullish comment by the CEO, and it makes me even more confident that TSMC will eventually return to the $1 trillion club.

2. Broadcom

Broadcom does many different things, but one emerging product line makes me bullish on the stock. Its custom AI accelerators, which it calls XPUs, are an alternative to Nvidia's GPUs, which have dominated the AI computing marketplace. Some customers are fed up with the prices they have to pay for Nvidia's GPUs and prefer Broadcom's XPUs because they are tailored to one workload, such as those used to train an AI model, eliminating ancillary functions that one customer may use and another doesn't.

While the adoption of these units doesn't spell the end for Nvidia, it does open the door for Broadcom to steal a sliver of the market, which it projects it will do shortly.

By 2027, Broadcom expects the addressable market for XPUs to be $60 billion to $90 billion from just three clients. With two clients launching their XPUs later this year and two more clients selecting Broadcom to produce their XPUs, that market opportunity is expected to expand. Considering Broadcom's trailing 12-month revenue totals $54.5 billion, any growth from this segment will dramatically boost its overall total.

This makes Broadcom a great stock to pick up for cheap, as the latest market sell-off has opened up an attractive buying opportunity.

Both stocks are on sale

From a forward price-to-earnings (P/E) standpoint, both Broadcom and TSMC look like bargain deals.

TSM PE Ratio (Forward) data by YCharts

Broadcom has a slightly higher premium than TSMC, as investors aren't as worried about Broadcom losing as much business as TSMC. However, the price you pay for both businesses is still much cheaper than in recent months.

I think both stocks look like great deals now and will provide investors with market-beating returns over the long term. However, you'll have to be patient, as there are plenty of fears regarding tariffs surrounding the broader economy.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $566,035!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $629,519!*

Now, it’s worth noting Stock Advisor’s total average return is 829% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Keithen Drury has positions in Broadcom, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

The uncertainty that has gripped the market recently has been palpable. Concerns about the on-again, off-again tariffs, a high-profile spat between the White House and the Federal Reserve Bank, and the ongoing trade war with China have raised concerns about the impact on the broader economy and led to historic volatility. However, a double dose of good news overnight sparked a broad-based market rally, which helped drive semiconductor and artificial intelligence (AI) stocks higher.

With that as a backdrop, chipmaker Advanced Micro Devices (NASDAQ: AMD) jumped 6.6%, semiconductor giant Broadcom (NASDAQ: AVGO) climbed 5.1%, and foundry Taiwan Semiconductor Manufacturing (NYSE: TSM) rallied 4.5%, as of 1:56 p.m. ET on Wednesday. A check of all the usual suspects -- earnings reports, regulatory filings, and analyst commentary -- revealed no company-specific news that was driving these stocks higher. This suggests that broader macroeconomic and geopolitical factors are at play.

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It's all about the tariffs

Make no mistake, the primary catalyst that helped drive stocks higher were comments from President Donald Trump that suggested he was making headway on the tariff front, particularly regarding the ongoing trade war with China. In a press conference in the Oval Office, Trump said tariffs on products from China will "come down substantially, but it won't be zero." He went on to say: "145% is very high and it won't be that high. It won't be anywhere near that high."

The comments came less than 24 hours after U.S. Treasury Secretary Scott Bessent made comments at an investor conference that suggested there was progress being made in the trade talks. He said he expected "there will be a de-escalation" in the rhetoric between China and the U.S in the "very near future."

Many have feared that wide-ranging tariffs could raise prices, boost inflation, and potentially spark a recession. Investors welcomed signs that progress is being made.

Feud with the Fed

There was more good news. It appears the high-profile feud between the Trump administration and Federal Reserve Bank Chair Jerome Powell may be on the mend. Trump has been vocal in his desire for lower interest rates, a move the Central Bank fears will reignite inflation. Last week, markets slumped when Trump said he can fire Powell if he wants to, and that his "termination cannot come fast enough," despite the Fed's historical independence from the executive branch.

When asked if he would resign under pressure from the White House, Powell said the law doesn't allow a president to fire the sitting Fed chair, except under the most egregious circumstances, a position supported by most legal scholars.

Trump's position appeared to soften late yesterday, when he said, "I have no intention of firing [Powell]."

Investors had feared the high-profile spat could escalate into a bruising legal battle, and the U.S. economy would be the ultimate victim of the clash.

Why it matters

Over the past couple of years, rapid advances in AI have sparked a wave of innovation, resulting in state-of-the-art AI models powered by the most advanced semiconductors. Many of the biggest names in technology have benefited from the AI revolution, with this trio of stocks leading the pack:

• AMD is a leading provider of some of the leading-edge chips needed to bring AI to life.
• Broadcom supplies many of the semiconductors and ancillary products used by data centers to power AI.
• Taiwan Semiconductor Manufacturing is the world's largest foundry, providing the most advanced semiconductors, particularly those used for AI.

Big tech companies have announced plans to spend an estimated $315 billion on capital expenditures in 2025, primarily on the data centers and servers needed to augment AI.

However, the threat of widespread tariffs could hamstring the semiconductor industry, significantly increasing the cost of semiconductors and associated products, bringing the AI revolution to a standstill. The prospect of improvements on the tariff front buoyed the markets, sending AI and chip stocks higher.

These three semiconductor stocks have been among the primary beneficiaries of accelerating adoption of AI, supplying the AI and semiconductor know-how that is supporting the buildout of AI. Given the magnitude of the opportunity, Broadcom, AMD, and Taiwan Semiconductor remain attractively priced, selling for 27 times, 21 times, and 17 times forward earnings, respectively.

Should you invest $1,000 in Advanced Micro Devices right now?

Before you buy stock in Advanced Micro Devices, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Micro Devices wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $561,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $606,106!*

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Danny Vena has positions in Broadcom. The Motley Fool has positions in and recommends Advanced Micro Devices and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

Intel (NASDAQ: INTC) stock is roaring higher in Wednesday trading thanks to a combination of bullish catalysts. The company's share price was up 5.4% as of 12:30 p.m. ET amid the backdrop of a 1.6% gain for the S&P 500 and a 2.3% rally for the Nasdaq Composite.

The stock market is jumping thanks to news that the Trump administration is interested in lowering tariffs on China and reducing trade war tensions, and Intel is a getting a significant valuation boost from the trend. Shares are also moving higher thanks to a report from Bloomberg that says the company plans to lay off 20% of its workforce.

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Intel stock rises as Trump signals new trade war approach

Recent comments from President Donald Trump, Treasury Secretary Scott Bessent, and White House press secretary Karoline Leavitt suggest that the administration is interested in making a trade deal with China that will significantly lower tariffs on the country's goods. If a deal were to materialize in the near future, it could be a substantial bullish catalyst for Intel stock and the market at large.

Is Intel gearing up for another big round of layoffs?

According to a new report from Bloomberg, Intel will reduce its current employee count by roughly 20%. The move is said to be concentrated on reducing the size of middle management and would come on the heels of another big cut to its workforce last year. New layoffs would likely be driven by a desire to lower expenses at a time when the business has been underperforming.

Intel is in the midst of a major restructuring under the leadership of new CEO Lip-Bu Tan, who became the company's top executive last month. In addition to cutting its workforce, selling off a 51% stake in its Altera programmable chips business, and other moves, the semiconductor company has reportedly been exploring deals that could see Taiwan Semiconductor Manufacturing and other chip giants step in to help run its foundry business. News about Intel's foundry strategy will likely be one of the stock's biggest performance drivers this year.

Should you invest $1,000 in Intel right now?

Before you buy stock in Intel, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Intel wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $561,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $606,106!*

Now, it’s worth noting Stock Advisor’s total average return is 811% — a market-crushing outperformance compared to 153% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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Keith Noonan has positions in Intel. 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.

Rigetti Computing (NASDAQ: RGTI) has caught the eye of many tech investors over the past couple of years as the quantum computing market has taken shape. The company is knee-deep in this market, designing and manufacturing quantum computing units and systems, as well as running a quantum computing platform application development.

Quantum computing hardware and software could be a $170 billion market by 2040, and the enthusiasm around this space has caused Rigetti's share price to surge 588% over the past year. But despite those gains, the company isn't profitable, and sales tumbled 32% in the fourth quarter to $2.3 million.

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Rigetti's skyrocketing share price means the stock now has a price-to-sales ratio of 147. That's a staggering valuation, and coupled with the company's losses and falling sales, it's probably best for investors to look elsewhere. Here are two great tech companies to choose from, both tapping into another large tech trend: artificial intelligence.

1. Taiwan Semiconductor

Taiwan Semiconductor (NYSE: TSM), also known as TSMC, is currently one of the most important artificial intelligence companies because it manufactures an estimated 90% of all advanced processors and is a critical production partner for AI leaders such as Nvidia.

Technology companies have gone all-in on an AI race, and many of them are spending hundreds of billions of dollars to build huge data centers that will serve as their artificial intelligence foundation for years to come. The ramp-up in spending resulted in TSMC's revenue rising 42% to $25.5 billion and earnings per American Depository Receipts (ADR) popping 60% to $2.12 in the first quarter (which ended March 31).

It's worth mentioning that there are some uncertainties around continued data center spending because of the recent tariff announcements, and TSMC could face potential issues if and when a specific semiconductor tariff is announced.

Still, no other company has such a strong position in AI chipmaking, and not many companies even have the technical capabilities to produce some of the most advanced processors the company makes. Even amid the backdrop of tariffs, Taiwan Semiconductor could still win over the long term, as tech companies are expected to spend an estimated $2 trillion on AI data centers over the next few years.

2. Microsoft

Microsoft (NASDAQ: MSFT) was an early mover in AI with its investment in ChatGPT creator OpenAI, and has since integrated the chatbot into many of its services under its Copilot brand. This has helped Microsoft stay on pace with other competitors in the AI software space and expand its potential in new areas like agentic AI.

AI agents, which can work on their own to complete tasks like online shopping or making reservations, could grow into a multitrillion-dollar market over the next few years.

Still, Microsoft's biggest AI opportunity comes from its strong position in cloud computing. Microsoft is the second-largest public cloud company after Amazon, with 21% of the market compared to 30% for its rival. Microsoft has closed that gap significantly over the past few years, as many developers and companies have chosen its Azure platform.

Azure's sales rose 31% in the company's second quarter (which ended Dec. 31), and that demand could increase in the coming years. Goldman Sachs estimates that AI cloud computing sales could reach $2 trillion by 2030.

Microsoft won't have to wait around to see the benefits of all these AI opportunities, either. The company's annual AI revenue run rate is now $13 billion, a massive 175% increase year-over-year. With Microsoft integrating one of the most advanced AI chatbots into its services and benefiting from the growth of AI cloud services, the company is well-positioned to tap into artificial intelligence for years to come.

Of course, as with buying any stock right now, investors should know that President Trump's tariffs will likely cause more uncertainty in the markets and could cause an economic slowdown. If you have many more years before retirement, you can likely ride out some of the short-term volatility with these companies, but investors closer to retirement may want to look for alternatives outside of the tech space for now.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $561,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $606,106!*

Now, it’s worth noting Stock Advisor’s total average return is 811% — a market-crushing outperformance compared to 153% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Goldman Sachs Group, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Shares of Taiwan Semiconductor Manufacturing (NYSE: TSM), popularly known as TSMC, have been under pressure in 2025. Investors have concerns surrounding the health of artificial intelligence (AI) infrastructure spending earlier this year followed by the recent tariff-related turmoil, which sparked a stock market sell-off. Still, the company's latest results show that these factors haven't derailed the company's impressive growth trajectory.

TSMC released its first-quarter results on April 17. The company's revenue and earnings rose impressively from the year-ago period, and management's guidance clearly indicates that it isn't expecting a slowdown in its growth on account of the tariff-fueled trade war.

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Let's take a closer look at TSMC's latest quarterly results and check why it may be one of the best bets in the AI chip sector right now.

AI-fueled demand is powering TSMC's impressive growth

TSMC's Q1 revenue jumped 35% year over year to $25.5 billion, while earnings shot up nearly 54% from the year-ago period thanks to an improvement in its margins. Specifically, TSMC's net profit margin increased by 5 percentage points from the year-ago quarter, and this can be attributed to the higher prices that it can charge customers.

The company enjoys a commanding lead in the global foundry market with an estimated share of 67% in the fourth quarter of 2024, according to Counterpoint Research. Its share of the foundry market increased by 6 percentage points from Q4 last year, thanks to the technology advantage it enjoys over rivals as well as the impressive customer base it has built.

TSMC's chip manufacturing services are used by AI chip giants such as Nvidia, Broadcom, Marvell, AMD, and Intel. These companies make various kinds of AI accelerators ranging from central processing units (CPUs) to graphics processing units (GPUs) to custom AI processors. The demand for these AI accelerators is expected to jump significantly in the future. Grand View Research estimates that the AI chip market could clock annual growth of 29% through 2030.

Given that TSMC fabricates chips for all the major designers of AI semiconductors, it is one of the best ways to capitalize on this massive end-market opportunity. However, TSMC's AI-related growth potential doesn't end here. That's because the company also manufactures chips for the likes of Samsung, Qualcomm, and Apple. Along with AMD and Intel, which manufacture chips used in personal computers (PCs), TSMC is well placed to make the most of the growing adoption of AI-enabled devices such as smartphones and PCs.

The generative AI-capable smartphone and PC market is expected to clock annual growth of almost 35% through 2029, presenting yet another massive growth opportunity for TSMC. So, it is easy to see why TSMC is expecting another quarter of solid growth. Its Q2 revenue guidance of $28.8 billion would be an improvement of 38% over the year-ago period, and this points toward an acceleration in the company's growth in the current quarter.

What's more, TSMC is expecting its operating profit margin to jump by 5.5 percentage points year over year in Q2. This should translate into outstanding earnings growth for the company. Another important thing worth noting here is that TSMC has maintained its capital expenditure forecast for 2025 despite tariff-related concerns.

This suggests that the company is confident of witnessing strong demand for its chips. This is precisely what CEO C.C. Wei pointed out on the latest earnings conference call:

Now let me talk about the recent tariff. We understand there are uncertainties and risk from the potential impact of tariff policies. However, we have not seen any change in our customers' behavior so far. Therefore, we continue to expect our full year 2025 revenue to increase by close to mid-20s percent in U.S. dollar term.

TSMC expects its AI chip revenue to double this year. That's why the company is focused on doubling its advanced chip packaging capacity this year to meet the robust demand for AI GPUs and custom processors, along with other chips needed for AI training and inference.

The stock is a no-brainer buy right now

We have already seen that TSMC's earnings are growing at a remarkable pace, and that trend is expected to continue in the current quarter as well. Moreover, the long-term potential of the AI chip market and TSMC's dominant position in the foundry space should ensure that it keeps growing at a nice clip for the remainder of the year and for the long run.

Analysts are expecting a 31% increase in the company's earnings this year. Importantly, TSMC is expected to maintain double-digit earnings growth for the next couple of years as well.

TSM EPS Estimates for Current Fiscal Year data by YCharts

However, the long-term opportunity in the AI chip market, which is expected to grow at an annual rate of almost 35% through 2035, could help TSMC's earnings grow at a faster pace than the market's expectations. Throw in the fact that TSMC is trading at less than 20 times earnings, and it is easy to see why it is a no-brainer buy right now to make the most of the fast-growing AI chip market.

So, investors looking to add a top AI stock to their portfolios should consider buying TSMC following its 25% decline this year as its strong earnings growth and attractive valuation could eventually translate into healthy gains on the market.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $561,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $606,106!*

Now, it’s worth noting Stock Advisor’s total average return is 811% — a market-crushing outperformance compared to 153% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Intel, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and Marvell Technology and recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.

Finding deals after a sell-off is a great way to make a profit as an investor. Many stocks are currently trading for an absurdly low valuation, even after the bump that stocks got on Wednesday.

Two that look like screaming buys right now are Taiwan Semiconductor Manufacturing (NYSE: TSM) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). Each of these stocks is so cheap right now that investors cannot afford to miss out on the deals the market is offering.

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Taiwan Semiconductor Manufacturing

At first glance, Taiwan Semiconductor appears to be an odd pick. President Donald Trump specifically targeted Taiwan with a 32% tariff rate, which could hurt Taiwan Semi since most of the chips it makes are produced in Taiwan. That rate has now dropped to 10% to all countries across the board. However, that ignores a huge piece of information in the tariffs: Semiconductors are exempt. This is a key point that many investors are missing, making Taiwan Semi an intriguing buy right now.

Another factor that could keep Taiwan Semiconductor off of Trump's list of targeted companies is that it's actively working to build new production facilities in the U.S. TSMC recently announced a $100 billion investment in U.S. chip manufacturing facilities, which will include three fabrication facilities, two packaging centers, and one research and development (R&D) facility. That's big news for TSMC, and it's exactly what Trump wants: to move more manufacturing capabilities inside the U.S.

Still, there's fear that a weaker consumer could hurt TSMC's business, as some of its chips are used in consumer-facing products like smartphones or vehicles. While this demand will likely dip, it's bound to be outweighed by massive growth in AI chip demand. Over the next five years, management projects that artificial intelligence (AI)-related revenue will increase at a 45% compound annual growth rate (CAGR). Overall, it expects its total revenue to grow at a 20% CAGR, indicating that the company will be fine.

Investors will hear more commentary on how tariffs will affect Taiwan Semi's demand during its Q1 conference call on April 17, but there's no reason to doubt the stock as much as the market does right now. Following the sell-off, Taiwan Semi's stock now trades for less than 18 times forward earnings.

TSM PE Ratio (Forward) data by YCharts

That's an incredibly cheap price for one of the world's most important companies, especially when you consider its growth and ability to sidestep tariffs. With how cheap the stock is right now, I think it's one that investors can't afford to miss out on, and they should be buying up shares left and right at today's prices.

Alphabet

Alphabet is a member of the "Magnificent Seven," a group of tech stocks that have led the market over the past five years. These stocks were often noted as being expensive, but Alphabet has never fetched a premium valuation.

Many investors are worried that its advertising-focused business model centered around the Google ecosystem may be in trouble as generative AI takes some of its market share. However, the habit of "Googling" something is engrained in the behavior of most users around the world. Plus, Alphabet has already integrated generative AI-powered summaries into Google search results, so it's getting ahead of the curve.

Still, should the economy plunge into a recession caused by tariffs, Alphabet's advertising business won't fare well. Advertising is one of the first places companies look to cut expenses during a downturn, which has historically negatively affected Alphabet.

I don't expect this time to be any different should the economy plunge into a recession, but this is far from the first time the market has been worried about a recession over the past 15 years. Despite that, Alphabet's stock is not far from a 15-year low from a trailing price-to-earnings (P/E) standpoint.

GOOGL PE Ratio data by YCharts

So, even with all the fears caused by tariffs or a recession, Alphabet's stock looks dirt cheap from a historical standpoint. This sell-off has occurred without any confirmation of a recession, only the fear of one.

As a result, I think today marks an excellent buying opportunity for Alphabet stock, as it has rarely been this cheap over the past 15 years. We'll hear more from Alphabet in early May about how it believes tariffs will affect the company, but I think it's an excellent time to scoop up Alphabet shares.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keithen Drury has positions in Alphabet and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.