What Is One of the Best Artificial Intelligence (AI) Stocks to Own for the Next 5 Years?
Key Points
Taiwan Semiconductor Manufacturing Co. is the leading chip manufacturer in the world.
It specializes in advanced chip manufacturing for leading semiconductor companies like Nvidia and Advanced Micro Devices.
TSMC’s strong position in the AI chip market suggests potential for substantial shareholder returns.
- 10 stocks we like better than Taiwan Semiconductor Manufacturing ›
Artificial intelligence (AI) is expected to add $40 trillion in operating efficiencies to the global economy over the long term, according to research from Morgan Stanley. One of the best stocks to profit from this incredible opportunity is Taiwan Semiconductor Manufacturing Co. (NYSE: TSM), which is making the chips powering this tech revolution.
The stock has soared 354% over the past three years and still offers attractive value that can help investors outperform the broader market.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Image source: Getty Images.
Why buy Taiwan Semiconductor stock
TSMC specializes in developing the most advanced chip technologies for use in data centers, as well as in phones and other devices. Companies like Nvidia and Advanced Micro Devices don't build their own chips. They design them and rely on TSMC for manufacturing. TSMC's expertise means it can price its services for robust profitability. Over the last year, it generated a stellar net profit margin of 44%, meaning it's converting nearly half of its revenue into profits.
Demand for high-performance chips used for AI drove 57% of TSMC's sales in the third quarter, and this contribution is likely to continue increasing. Management expects AI chip demand to remain robust over the next five years. Analysts are currently forecasting TSMC's revenue and earnings to grow at an annualized rate of 17% through 2029. This should deliver a comparable return for investors, as the stock trades at a reasonable forward earnings multiple of 24 on 2026 estimates.
Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?
Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $624,230!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,187,967!*
Now, it’s worth noting Stock Advisor’s total average return is 1,069% — a market-crushing outperformance compared to 195% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of November 10, 2025
John Ballard has positions in Advanced Micro Devices and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
Recommended Articles
