Prediction: This Will Be the Top-Performing Semiconductor Stock Over the Next 10 Years (Hint: It's Not Nvidia)

Adam Spatacco, The Motley Fool

Sun, May 4, 2025, 3:30 PM 4 min read

• The role artificial intelligence (AI) plays in the semiconductor industry is expected to rise significantly over the next several years.

• Taiwan Semiconductor Manufacturing is a key partner to chipmakers as they rely on the company's foundry services.

• While Taiwan Semi's growth prospects look bright, the stock is trading at a historically cheap valuation.

The launch of ChatGPT on Nov. 30, 2022 represented one of the leading catalysts that sparked the revolution around artificial intelligence (AI). Since that date, shares of semiconductor stock Nvidia have soared an astronomical 550%, transforming the company to a multitrillion-dollar enterprise in the process. While semiconductor chips should remain an integral component of AI development, investors want to identify new growth opportunities beyond Nvidia.

Taiwan Semiconductor Manufacturing (NYSE: TSM) is another company that looks well-positioned to dominate the AI chip arena over the next decade. Its growth prospects and valuation trends support the case for why Taiwan Semi is my top choice in the chip space right now.

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Chances are you're familiar with names like Nvidia, Advanced Micro Devices, and Broadcom when it comes to advanced chipsets and data center infrastructure used for building AI applications. What you may not be so familiar with, however, is the role Taiwan Semi plays in the background.

Nvidia, AMD, Broadcom, OpenAI, Amazon, Qualcomm, and many others rely on the fabrication processes of TSMC to help manufacture their chips and integrated systems products. In other words, Taiwan Semi brings the engineering prowess from AI's biggest players to life.

In 2024, TSMC generated $88.3 billion in sales and $6.81 in earnings per share. Per the consensus estimates below, Wall Street is expecting the company's top line to continue growing rapidly over the next couple of years while maintaining healthy profitability too.

AI in the semiconductor market is expected reach a market size of $233 billion by 2034, according to Precedence Research. Considering that TSMC already holds over 60% of the foundry market, combined with its long roster of industry-leading chip designers as customers and the rise of custom silicon chipsets, Taiwan Semi is in a great position to achieve or even surpass the financial estimates illustrated above.