Taiwan Semiconductor Manufacturing Is the Pickax of the Artificial Intelligence (AI) Gold Rush. Is There More Upside?

Core Viewpoint - Taiwan Semiconductor Manufacturing Company (TSMC) is positioned to benefit from significant demand waves in the AI sector and potential iPhone upgrade cycles, making it a compelling investment opportunity [1][8]. Group 1: AI Demand and Growth Projections - TSMC is a key player in the chip manufacturing industry, providing chips for major companies like Nvidia and AMD, and is expected to see substantial growth in AI-related revenue [3][4]. - Management forecasts a 50% compound annual growth rate (CAGR) for AI-related revenue over the next five years, predicting that AI computing will account for approximately 20% of total revenue by that time [4]. - The overall revenue growth guidance for TSMC is set at a 15% to 20% CAGR for the coming years, which is notable for a company of its size [4]. Group 2: Client Concentration and Market Opportunities - A significant portion of TSMC's revenue, approximately 25%, comes from a major client, which is identified as Apple, given its role as a supplier for iPhone chips [5][6]. - Apple's recent announcement regarding generative AI features exclusive to newer iPhone models could trigger a substantial refresh cycle, as an estimated 90% of iPhones in use are older than the iPhone 15 [5][6]. - The market's reaction to Apple's announcement saw its stock rise over 10%, while TSMC's stock only increased by about 2.5%, indicating a potential oversight by investors and an opportunity for TSMC [6][8].