TSM and ASML Are AI Stocks That Look Like Screaming Buys Now

TSM and ASML Are AI Stocks That Look Like Screaming Buys Now

  • 19.03.2025 16:25
  • 247wallst.com
  • Keywords: AI, Stock Market

TSM and ASML are undervalued AI stocks offering exposure to high-growth semiconductor manufacturing, benefiting from strong chip demand and advanced lithography technology with potential upside if geopolitical tensions ease.

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Estimated market influence

Taiwan Semiconductor Manufacturing Company (TSM)

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Analyst rating: N/A

Leading in AI chip production, supplying major tech companies like Nvidia, Apple, and AMD. Their stock is undervalued with a P/E ratio of 25-times.

ASML Holding NV ADR

Positivesentiment_satisfied
Analyst rating: N/A

Dominant in EUV lithography technology, critical for next-gen chip production. High demand despite challenges, growing by over 16% annually.

Context

Analysis of TSM and ASML as AI Stocks: Business Insights and Market Implications

Taiwan Semiconductor Manufacturing (TSMC)

Key Facts and Data Points:

  • Stock Price: $173.85 (▲ $1.02, 0.58%)
  • Market Cap: $897.95B
  • P/E Ratio: 25.20
  • Gross Margin: 40.50%
  • Dividend Yield: 1.58%

Business Insights:

  • TSMC is a critical player in the AI chip sector, supplying chips to major tech companies like Nvidia, Apple, and AMD.
  • The company is undervalued with a P/E ratio of 25x, making it an attractive investment opportunity.
  • Geopolitical tensions between China and Taiwan pose risks but could also present upside if relations improve.

Market Implications:

  • TSMC’s leadership in the chip manufacturing industry positions it as a key beneficiary of AI growth.
  • Investors view TSMC as a "picks and shovels" play, offering broad exposure to AI-driven innovation.

ASML Holdings (ASML)

Key Facts and Data Points:

  • Stock Price: $734.29 (▼ $52.11, 7.10%)
  • Market Cap: $287.47B
  • P/E Ratio: 34.96
  • Gross Margin: 26.80%
  • Dividend Yield: 1.05%

Business Insights:

  • ASML is a leading provider of EUV lithography machines, essential for producing next-generation chips.
  • The company benefits from strong pricing power due to its near-monopoly status in EUV technology.
  • Despite concerns about slowing backlog growth, ASML has maintained revenue growth of over 16% annually.

Market Implications:

  • ASML is positioned as another "picks and shovels" play in the AI chip sector, with high demand for its machines driving long-term growth.
  • The company’s ability to navigate export curbs and tariffs highlights its resilience in a challenging environment.

Market Trends and Competitive Dynamics

  • Both TSMC and ASML are integral to the AI chip supply chain, benefiting from the surge in demand for advanced semiconductor solutions.
  • Their competitive advantages include:
    • TSMC: Industry leadership and diversified customer base.
    • ASML: Monopoly on EUV technology and high barriers to entry.
  • Risks include geopolitical tensions, regulatory changes, and potential supply chain disruptions.

Long-Term Effects and Strategic Considerations

  • The AI revolution is expected to drive sustained demand for semiconductors, positioning both companies for long-term growth.
  • Investors view TSMC and ASML as critical plays in the AI ecosystem, with the potential for significant upside as the sector matures.

Conclusion

Both TSMC and ASML are well-positioned to benefit from the AI-driven semiconductor boom. While risks such as geopolitical tensions and supply chain challenges persist, their strong financials and market leadership make them attractive investments for those seeking exposure to the AI chip sector.