1 Unstoppable Stock Powering Nvidia and the AI Revolution

Core Viewpoint - Taiwan Semiconductor Manufacturing Company (TSMC) is a critical player in the semiconductor industry, significantly powering Nvidia and the broader AI revolution, with a market capitalization of over $3.34 trillion for Nvidia [1]. Group 1: Company Overview - TSMC has established itself as a leader in chipmaking through its innovative foundry model, focusing on manufacturing expertise rather than direct sales to customers [2]. - The company has few competitors, including Intel and Samsung, and serves major clients like Apple, Alphabet, Amazon, and Nvidia [2]. Group 2: Financial Performance - TSMC's operating income has surged by nearly 300% over the past year, reaching $30 billion, with total revenue exceeding $70 billion and a 30% revenue growth reported in May due to increased AI capital spending [3]. Group 3: Market Sentiment and Risks - TSMC's stock has appreciated by 439% over the last five years, with investors optimistic about continued growth driven by the AI revolution, although concerns about a potential AI bubble exist [4]. - The company is diversifying geographically to mitigate risks associated with potential Chinese aggression, including plans to build factories in the U.S. with a $6.6 billion grant from the government [5]. Group 4: Valuation Concerns - TSMC's price-to-earnings (P/E) ratio has increased from just above 10 to nearly 35, raising questions about whether the stock is overvalued at current levels compared to the S&P 500's P/E of about 28 [7].