Chris Neiger, The Motley Fool
4 min read
In This Article:
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Taiwan Semiconductor is the dominant manufacturer of AI processors.
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Amazon is a leading player in cloud computing, and its ad business continues to impress.
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Both stocks look like wise investments over the long term, but expect some short-term volatility.
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10 stocks we like better than Taiwan Semiconductor Manufacturing ›
There's no shortage of great companies to invest in, but narrowing down your decision to just a couple of top stocks can be difficult. Volatility in the market earlier this year has left some investors wondering which companies have the stability, growth prospects, and lead in their respective markets to be long-term winners.
If you're searching for two such companies, I think Taiwan Semiconductor Manufacturing (NYSE: TSM) and Amazon (NASDAQ: AMZN) fit the bill perfectly. Both dominate their niches and are tapping into long-term trends that should keep their businesses humming for years to come. Here's why.
It's hard to escape the constant drumbeat of artificial intelligence (AI) news, but there's a good reason it's getting so much attention. AI could add nearly $16 trillion to global GDP by 2030, according to PwC data, and it's transforming industries at a rapid pace.
Technology companies are racing to integrate AI into their products and services at breakneck speed, fearing that if they don't, they'll be left behind. That's causing tech giants, including Nvidia, Microsoft, Amazon, Alphabet, and others, to invest trillions of dollars into data centers with advanced processors.
This is where Taiwan Semiconductor (often referred to as TSMC) comes in. The company is the leader in advanced semiconductor manufacturing, holding nearly 90% of the market, and it's resulting in gangbuster growth.
Artificial intelligence sales are expected to double this year, according to management, and consensus estimates from analysts put the company's total sales at $4.2 billion for fiscal 2026, up 16% from the previous year.
What's more, TSMC is very profitable, with earnings rising 53% to $2.12 per American depositary receipt (ADR) in the most recent quarter.
Some people have worried that demand for high-performance AI processors will cool down, but so far that hasn't happened. Tech companies appear to be locked into an AI race that has them vying for the best infrastructure available, which means spending to build new data centers and upgrade older ones with TSMC-manufactured processors.
Amazon might be easy to overlook because other tech players with more direct exposure to AI, like Nvidia, are getting a lot of attention. But Amazon is benefiting from the AI boom as well with its Amazon Web Services (AWS).
