Why Taiwan Semiconductor Manufacturing Company Limited (TSM) Is Among the Best Semiconductor Stocks with Huge Upside Potential?

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is among the 11 Best Semiconductor Stocks with Huge Upside Potential. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s largest dedicated contract chip producer, or foundry, with a mid-60% market share in 2024. It uses its clients’ distinct IC designs to create integrated circuits for them. The shift of semiconductor companies worldwide from integrated device manufacturers to fabless designers has long benefited the firm. It assumes the costs and capital expenditures of operating factories in a highly cyclical market for its clients, just like all other foundries. Foundries frequently add too much capacity while demand is high, which can lead to underutilization during recessions and reduce profitability.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) should continuously generate higher gross margins than its rivals because of its economies of scale and premium pricing, which are supported by innovative process technologies. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the foundry leader, but each generation of process technology matures and commoditizes quickly, putting the company under pricing pressure. It is one of the Stocks with Biggest Upside.

While we acknowledge the potential of TSM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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