Taiwan Semiconductor Manufacturing (TSM), or TSMC for short, has been on a strong run this year thanks to the ongoing Artificial Intelligence wave. AI stocks have been on a tear in 2024, with Nvidia (NVDA) leading the charge. However, other tech stocks like TSM have also seen a benefit, with the Taiwanese chipmaker up nearly 75% year-to-date.
Taiwan Semiconductor has become the clear leader in the semiconductor contract manufacturer space. The company should continue to benefit from the continued ramp-up in AI infrastructure spending. As a result, TSM stock is looking more and more interesting for investors looking to jump in. However, is it worth the risk to invest in TSMC heading into the final days of 2024?
Should You Invest in TSM Stock Now?
While TSMC’s strong revenue growth and gross margin expansion in recent quarters might lead to the assumption that this is an easy stock to invest in, that is not the case. In fact, multiple rivals of TSM in the tech industry are struggling as of late. Intel‘s third-party foundry business has been floundering, with the company putting up huge losses and seeing revenue decline last quarter. Samsung’s foundry business, meanwhile, has been plagued by operational struggles from unstable yields and customer losses.
Fortunately for TSMC, the company is the primary manufacturer of Nvidia’s graphics processing units (GPUs). These units are seeing unrelenting demand, which as a result, is driving demand in TSMC. This demand only benefits TSM stock, which is up 31 percent in the last six months.
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With Nvidia showing little sign of slowing down, it may be safe to say that TSMC stock (TSM) is a safe investment. It is important to do your research though before making bets on the company’s stock performance. As mentioned previously, even with rivals failing and TSM accounting for an over 60% market share in the contract semiconductor manufacturing space, anything can happen to send TSMC back down. At press time, the stock is up 7% to 198.02 in the last five days, nearing a high of 198.34.