Taiwan Semiconductor Well-Positioned to Benefit from AI Chip Boom Despite Geopolitical Uncertainty
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Taiwan Semiconductor Manufacturing Company (TSM) is an ideal "pick-and-shovel" stock to play the AI chip race due to its key role as a major manufacturer.
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TSM has a wide moat and cost advantages that make it difficult for competitors like Intel to replicate, even with large investments planned.
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Demand for AI chips will continue growing rapidly, but the winner in terms of profit margins is still uncertain amid intense competition.
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Concerns about geopolitical tensions hurting TSM due to its Taiwan location are likely overblown given the massive global economic impacts.
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Compared to "hot" AI stocks like Nvidia, TSM trades at a lower forward P/E and looks attractively valued for long-term investors.