Investing solely in one stock can be a risky and unproductive approach. Instead, consider it as an opportunity to learn about the values of a company and identify potential risks associated with other stocks you’re interested in. For my personal preference, I’d look for a stock that demonstrates better-than-average growth, leads its industry, and seems virtually immune to disruption.
Few businesses encompass all these characteristics, as some operate within highly competitive markets, thereby making disruption more plausible. Nevertheless, I believe one organization that embodies each trait (and several more) is Taiwan Semiconductor Manufacturing Company Limited (TSMC). As a leading chipmaker in its field, TSMC demonstrates potential for substantial expansion and maintains a firm position within its sector.
Among my preferred stocks for purchase currently, it’s the one I’d single out as the best bet, should I be compelled to invest in just a single stock.
TSMC is the industry leader in chip fabrication
As a tech enthusiast, I can’t help but marvel at Taiwan Semiconductor Manufacturing Company (TSMC), the reigning titan in the semiconductor fabrication sector. The reason for its unparalleled status is simple: it serves as a reliable manufacturing partner rather than a direct competitor to consumers.
Unlike some other chip foundries, TSMC doesn’t dabble in marketing proprietary designs of its clients. This ensures that my designs remain exclusive and secure, fostering a profound sense of trust between us that is hard to find elsewhere, especially with giants like Samsung and Intel, who are often in direct competition.
Furthermore, Taiwan Semiconductor Manufacturing Company (TSMC) often takes the lead in innovative technology developments. Should you seek cutting-edge chip technology (3-nanometer chips), your choices are limited to TSMC and Samsung. However, it’s worth noting that TSMC has achieved impressive production yields of approximately 90%, whereas Samsung’s production yields currently hover around 50%. This higher level of waste in the manufacturing process leads to a more expensive final product for the consumer.
Despite Taiwan Semiconductor Manufacturing Company (TSMC) already leading in semiconductor technology, it’s not slowing down. In fact, TSMC plans to introduce its 2nm chip node this year, followed by the 1.6nm node next year. This continuous cycle of advancement will keep their clients loyal, as they can trust that TSMC is consistently striving for cutting-edge chip technology and has a reliable history to support it.
Boasting high-profile clients like Nvidia and Apple, Taiwan Semiconductor Manufacturing Company (TSMC) has solidified its business with major tech giants. This strategic alliance with cutting-edge companies reinforces TSMC’s prominent position in the industry, barring any significant mishaps. Clients value TSMC for its consistent delivery, and they are reluctant to switch providers even for attractive deals or price reductions, acknowledging the superior quality it offers.
In summary, TSMC, headquartered in Taiwan, is expanding globally. It’s setting up production facilities in Japan and Germany, and investing a massive $165 billion in the United States. This move aims to avoid potential tariffs and ensure a stable supply chain for TSMC.
I find Taiwan Semiconductor’s investment case quite convincing, but what truly makes it my go-to stock to buy and hold is another strong argument.
Management expects huge growth over the next few years
One point I brought up was that any stock I would invest in and hold should demonstrate growth that surpasses the market average. Taiwan Semiconductor appears to be a strong candidate, as their management projects a 20% compound annual growth rate (CAGR) for the five-year period starting in 2025. This projected growth is substantial, and it significantly outpaces the market standard.
After surpassing the five-year milestone, investing in Taiwan Semiconductor represents a wager on increased usage of sophisticated chips, a prediction that seems almost inevitable. In other words, Taiwan Semiconductor is currently a shrewd choice, being valued at 26 times its future earnings.
Although Taiwan Semiconductor’s current valuation (it trades at approximately 23.7 times its future earnings) is slightly higher than the market average (the S&P 500), it is forecasted to generate exceptional growth in the coming five years, justifying this premium price.
Among my current investments, Taiwan Semiconductor stands out as a top pick and a strong conviction. I believe this is a stock that most growth-oriented investors should consider adding to their portfolios. Its performance in recent years has been impressive, a testament to its potential.
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2025-07-22 13:50