TSMC can withstand market panic, foreign media reveals top choice for growth stocks

TSMC’s stock price has fallen sharply in the past month. Like many other semiconductor companies, concerns about artificial intelligence have triggered a sharp correction across the industry. Foreign media Seeking Alpha reported that despite recent industry fluctuations and increased political uncertainty, TSMC remains one of the top choices for long-term growth stocks.

TSMC’s technology leadership, especially in advanced processes such as N2 (2nm) and packaging innovations such as CoWoS, ensures that it will be able to benefit from artificial intelligence and future technology cycles. In addition, TSMC has software industry profit margins, strong cash flow, very low debt, and strong pricing power as the sole producer of the most advanced chips.

Concerns about the growth of artificial intelligence have intensified recently, and the Democratic Party's landslide victory in the United States has triggered panic, with people worried that the United States will give up its strongest growth momentum this century. The Democratic Party has been committed to limiting the expansion and construction of domestic data centers, so many investors and analysts have lowered their expectations for the future profitability of many artificial intelligence manufacturers, including TSMC. TSMC is not only one of the main beneficiaries of the development of artificial intelligence, but also a key force in driving artificial intelligence to achieve what it is today, because TSMC is responsible for producing the latest and most powerful GPUs in the world.

There is uncertainty: corporate financing will be tighter and tax incentives will be reduced, which means hyperscale data center operators will need to invest more money to achieve their goals or temporarily slow down and re-evaluate the situation. People are worried that many projects will be delayed, suspended, or even canceled in the coming period.

However, the opposite is true. An unsubstantiated fear is about to become a reality. Some states have said they would propose a moratorium on approvals but would exempt projects already under construction. The report believes that for TSMC and other artificial intelligence manufacturers, the situation will not change in 2027. Demand still far outstrips supply, and orders for 2027 are almost fully booked, so these companies aren't expecting any slowdown.

At present, artificial intelligence is where the technological advantage lies, and TSMC plays a pivotal role in it. It is TSMC that promotes the development of artificial intelligence. Therefore, after artificial intelligence becomes a conventional technology, TSMC will continue to break through the limits of chip size and continue to improve chip performance. TSMC will continue to be at the forefront of the next big technological change because it will provide the chips for this specific technological revolution.

TSMC's fundamentals are impressive. Although it is a manufacturing company, its profit margins are comparable to those of a software company. The reason is that as the only company capable of producing the most advanced chips needed for the artificial intelligence revolution, TSMC has strong pricing power.

TSMC has a strong balance sheet, ample cash reserves, very low debt, and billions of dollars in cash flow, which means you're buying a solid company with excellent fundamentals rather than one that's not yet profitable. This is a strong company, and solid fundamentals should ultimately translate into strong returns over the long term.