Missed Out on Palantir's Run-Up? My Best Artificial Intelligence (AI) Stock to Buy and Hold.

Core Viewpoint - The growth of AI is significantly boosting demand for chips, benefiting TSMC, which is a key player in the semiconductor industry, particularly in manufacturing chips for AI applications [1][4][16] Financial Performance - TSMC's revenue increased by 32% in the first 11 months of 2024 compared to the previous year, recovering from a 9% decline in 2023, with expectations of reaching $90 billion in revenue for 2024 [2][3] - Consensus estimates indicate continued healthy growth for TSMC's top line in the coming years [3] Market Opportunities - Major AI chipmakers, such as Broadcom, are experiencing substantial revenue growth, with Broadcom reporting a 220% increase in AI chip sales for fiscal 2024, indicating a larger market potential for custom AI processors [4][10] - The AI accelerator market is projected to grow at an annual rate of 60%, potentially reaching $500 billion by 2028, while Nvidia sees a $1 trillion opportunity in the data center market [11] Capacity Expansion - TSMC plans to double its advanced chip packaging capacity to 70,000 wafers per month by 2025, with further increases to 90,000 wafers per month by 2026, to meet rising demand for AI chips [12][13] Valuation Comparison - TSMC's trailing earnings multiple is 33, and its forward earnings multiple is 23, making it significantly cheaper compared to Palantir, which has a price-to-earnings ratio of 411 and a forward earnings multiple of 172 [14][15] - TSMC's earnings are expected to grow at a rate of 27% to $8.93 per share in 2025, outpacing Palantir's projected growth of 25% to $0.47 per share [15] Market Position - TSMC holds a dominant position in the foundry market with a 64% market share, far ahead of Samsung's 12%, positioning it well to capitalize on the growth in AI chips [16]