What Is 1 of the Best Tech Stocks to Buy Now?

The growing adoption of artificial intelligence (AI) is driving the demand for more chips, and this trend is expected to continue in the years to come. This is ultimately benefiting Taiwan Semiconductor Manufacturing (TSM 2.79%). The chips Taiwan Semiconductor (TSMC) makes for other semiconductor companies power many devices, everything from your phone to the most advanced AI systems.

TSMC has the competitive positioning, profitability, and massive scale to help investors realize excellent returns over the long term.

Attractive growth at a reasonable price

TSMC handles the manufacturing of thousands of different products every year. It has extensive capabilities built upon decades of investment, utilizing 288 different manufacturing processes. Nearly three-quarters of its revenue comes from developing the most advanced processing technologies, including 3-nanometer, 5-nanometer, and 7-nanometer chips.

The great thing about investing in TSMC is that you don’t have to worry about picking winners and losers in the AI chip race. These bets are unnecessary because TSMC makes chips for all the leading chip companies, and that dominant position translates to stellar profit margins.

Over the last year, TSMC has generated $50 billion in net profit on $115 billion of revenue. Analysts expect earnings per share to grow 25% on an annualized basis in the next several years. Assuming the company delivers on those expectations, investors could double their money in just three years if the stock continues to trade at the same price-to-earnings multiple. Shares of Taiwan Semiconductor currently trade at a reasonable 23 times next year’s consensus earnings estimate.