The signs of a new AI boom are suddenly everywhere again. AI stocks are soaring this year, with companies like Nvidia and Super Micro Computer surpassing analyst estimates as cloud infrastructure companies and AI start-ups ramp up spending on AI hardware. The fervor for AI stocks has become so intense that even stocks Nvidia has invested in, like Soundhound AI, have surged.

However, some experts are concerned that an AI bubble may be forming. Wharton professor Jeremy Siegel and respected investors like Jeremy Grantham and Jeffery Gundlach have raised alarm bells. Despite these fears, the demand for AI infrastructure shows no signs of slowing down.

Taiwan Semiconductor Manufacturing (TSMC) founder Morris Chang recently described the overwhelming demand his company is seeing for AI computing power. He mentioned that customers are not just talking about tens of thousands of wafers, but about building multiple fabs. This indicates the exponential growth in the demand for AI chips and computing power.

TSMC is the world’s largest contract manufacturer of semiconductors and plays a crucial role in producing chips for companies like Apple, Nvidia, Broadcom, and AMD. As the demand for AI chips continues to rise, TSMC’s market power and competitive advantages are expected to expand.

In the current AI boom, companies like Nvidia are the picks-and-shovels plays, providing the essential infrastructure for running AI applications and high-powered models like ChatGPT. TSMC, on the other hand, stands as a meta picks-and-shovels option in the AI boom, as it is vital to the AI chipmakers like Nvidia.

The demand for new fabs, especially for advanced AI chips, poses significant challenges in terms of costs and regulatory barriers. Building a state-of-the-art fab can cost billions of dollars, making it a complex and expensive process.

As the demand for AI chip manufacturing grows, TSMC holds a strong position in the market. The company’s dominant market share and role in the AI supply chain make it a compelling investment option. While TSMC may not experience the same explosive growth as Nvidia, it is well positioned for steady gains in the future.

With TSMC already experiencing significant stock price growth and trading at a reasonable valuation, it is considered a strong contender in the AI stock market. As demand for AI chips and computing power continues to rise, TSMC is expected to be a key player in this evolving industry.

In conclusion, the quotes from industry experts and the overwhelming demand for AI computing power indicate that the AI boom is far from over. TSMC’s critical role in producing AI chips and its strong market position make it a promising investment for those looking to capitalize on the AI revolution.


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