Prediction: 1 Stock That Will Be Worth More Than Alphabet 5 Years From Now
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is currently the fourth-largest company in the world, with a market capitalization of just over $2 trillion, and it achieved this stellar valuation thanks to its dominant position in the search engine and the digital advertising markets.
Despite the high market cap, Alphabet’s growth hasn’t been all that steady in recent years. The company faces growing competition in the digital ad space, while its artificial intelligence (AI) efforts have run into challenges.
This is probably why analysts expect Alphabet’s earnings to increase at a relatively slower pace of 20% a year for the next five years as compared to the 24% seen in the last five years.
There are other technology stocks that are clocking faster growth by making the most of the lucrative AI opportunity. In this article, we will take a closer look at one such name that could eclipse Alphabet’s market cap in the next five years.
Taiwan Semiconductor Manufacturing (NYSE: TSM), known popularly as TSMC, is a recent addition to the trillion-dollar market cap club. It is now the eighth-largest company in the world by market cap, and its valuation is just above $1 trillion.
TSMC’s latest results have played a key role in helping it become a trillion-dollar company. The stock surged 10% following the release of its third-quarter results on Oct. 17, with better-than-expected numbers and improved guidance.
The semiconductor foundry specialist reported a 36% year-over-year increase in revenue to $23.5 billion, while earnings shot up 50% year over year in U.S. dollar terms to $1.94 per share.
TSMC now expects to end 2024 with a 30% spike in revenue, up from the earlier expectation of mid-20% growth. More importantly, its status as the largest semiconductor foundry in the world puts it in a position to make the most of the secular growth of the industry it serves. TSMC fabricates chips for Nvidia, Intel, Advanced Micro Devices, Broadcom, Apple, and Qualcomm, among others.
This diverse customer base means that TSMC is set to benefit from multiple fast-growing end markets such as AI data center chips, generative AI smartphones, and personal computers. For instance, the size of the AI semiconductor market could grow to $846 billion in 2035. All the major players tap TSMC’s foundries to manufacture their chips, including market leaders Nvidia and Broadcom.
Apple and Qualcomm booked out TSMC’s advanced chip production capacity until 2026 because both companies want to make the most of the growing demand for AI-enabled smartphones and PCs. So analysts bumped up their growth expectations from TSMC for 2024, 2025, and 2026.
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