TSMC is on the list! Amid the technology sell-off, foreign media named "these two stocks" to buy now

Technology stocks have been under selling pressure recently as rising energy prices, doubts about the sustainability of data center investments, and market concerns about possible tightening of AI regulations after the U.S. midterm elections. Foreign media "The Motley Fool" analyzed that the market's doubts about the development speed of the AI ​​industry are not necessarily all bad things. Moderate supervision may reduce industry risks, and the long-term development prospects are still worth looking forward to. Among them, 2 stocks are good buying opportunities now and are worth paying attention to.

The report pointed out that in recent years, AI technology has been regarded as having the potential to change the industry, attracting a large amount of capital to pour into related companies. However, since the beginning of this year, the market has gradually emerged with doubts about rising energy prices and the sustainability of data center investment expenditures, which has affected the rising momentum of technology stocks. The recent U.S. midterm election results have also deepened investor anxiety.

However, analysts believe that the market is beginning to pay attention to the risks that may arise from the rapid development of AI, which does not necessarily mean that the industry’s prospects have deteriorated. Proper supervision and risk control may make the development of the AI ​​industry more stable, which will be beneficial to relevant companies and shareholders. Therefore, the recent selling pressure on technology stocks may create entry opportunities for long-term investors.

First up is Taiwan Semiconductor Manufacturing Company (TSMC). TSMC plays a key role in the global AI industry chain. Many well-known AI chip products currently on the market rely on TSMC for manufacturing. According to Counterpoint Research, TSMC’s market share in the global foundry market exceeds 70%, and it has an unshakable industrial position.

It is worth noting that TSMC’s revenue does not entirely rely on AI chips. Products such as smartphones, traditional personal computers, and smart home appliances are also important sources of business for the company. This means that even if the growth rate of the AI ​​industry slows down in the future, demand for other chips will still have the opportunity to support revenue and reduce the company's dependence on a single market.

However, the current demand for AI is still strong. TSMC also stated in its latest quarterly financial report that it expects AI demand to continue to increase, especially driven by agent AI (Agentic AI). A large number of chips are required to provide computing power, which also brings new growth momentum to TSMC.

From a valuation point of view, after the recent stock price correction of TSMC, the estimated price-to-earnings ratio is about 22 times. Compared with the market's high pursuit of AI concept stocks in the past, it has become relatively cheap. Analysts believe that TSMC can not only benefit from the long-term growth of AI, but also have other businesses to support operations, making it a worthy target for long-term deployment.

Another stock that's getting attention is Broadcom. Broadcom mainly designs customized chips, also known as XPUs, which are built for specific computing needs. In recent years, Broadcom has actively cooperated with large and ultra-large-scale cloud service providers, and has also established business relationships with AI players such as OpenAI and Anthropic, becoming an important participant in the AI ​​chip market.

Broadcom revealed in its latest earnings call that it expects Anthropic to become the company's largest XPU customer next year, and estimates that its AI business revenue may reach US$230 billion in fiscal year 2028. The latest quarterly financial report also showed strong growth. AI semiconductor revenue increased by 221% year-on-year to US$16 billion, driving the company's total revenue, operating profit and free cash flow to record highs simultaneously.

In addition to AI chips, Broadcom also has a mature network equipment business. Its products include switches and routers, which are not only used in AI data centers but also widely used in general network systems. As the AI ​​data center continues to expand, the demand for high-speed transmission and data exchange in network equipment has also increased, allowing Broadcom to obtain revenue from the network infrastructure market in addition to customized chips.

In terms of stock price valuation, Broadcom's recent estimated price-to-earnings ratio has dropped significantly to 16 times from more than 40 times earlier this year, indicating that the market has revised its valuation. Analysts believe that Broadcom has a mature network equipment business and advantages in the customized AI chip market. These two major businesses are expected to continue to support long-term growth.