The “Magnificent Seven” is a term coined by CNBC’s Jim Cramer to identify the top stocks in the market, including Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta Platforms, and Tesla. However, DailyBubble believes that one crucial business is missing from this list – Taiwan Semiconductor (NYSE: TSM).
Taiwan Semiconductor, with a market cap of $900 billion, is the seventh-largest company listed on U.S. exchanges, surpassing Tesla. As a chip foundry, TSMC specializes in manufacturing chips designed by other companies, making it a key player in the industry. With cutting-edge 3 nanometer chip technology and plans for 2nm chips in 2025, TSMC leads the market in chip innovation.
While TSMC’s clients are not publicly disclosed, all members of the Magnificent Seven are either direct or indirect customers. This strategic position allows investors in TSMC to benefit from technological advancements made by these top companies.
Taiwan Semiconductor is poised for growth with two significant tailwinds. Apple’s recent launch of Apple Intelligence, available only on the latest iPhones, could spark an upgrade cycle benefiting TSMC, which relies heavily on smartphone revenue. Additionally, the AI sector shows promise, with TSMC projecting a 50% CAGR in AI-related hardware revenue over the next five years.
Despite trading at 28 times forward earnings, which may seem steep compared to peers, TSMC’s long-term growth potential is attractive. DailyBubble sees Taiwan Semiconductor as a strong investment for long-term growth, making it a valuable addition to the list of top stocks in the market.
In conclusion, while the “Magnificent Seven” captures the dominant stocks in the market, DailyBubble believes that the inclusion of Taiwan Semiconductor in the cohort as the “Incredible Eight” makes sense given its innovative technology and growth prospects.