Investors looking for significant long-term gains in the stock market are increasingly focusing on industry leaders that bring innovation to expanding markets. Among the sectors driving this growth are artificial intelligence (AI), semiconductors, and cybersecurity. As demand in these areas intensifies, two prominent tech stocks stand out as particularly promising for investors: Taiwan Semiconductor Manufacturing Company (TSMC) and CrowdStrike Holdings.
Taiwan Semiconductor Manufacturing (TSMC) plays a pivotal role in the global supply chain for semiconductors, essential components used in everything from smartphones to data centers. The company has secured a strong competitive edge through its expertise in manufacturing advanced chips, which positions it well to capitalize on the burgeoning growth opportunities presented by AI advancements. Recently, TSMC reported a remarkable 41% year-over-year increase in revenue driven by heightened demand for state-of-the-art process technologies.
Despite the cyclical nature of the chip industry, TSMC’s growth trajectory appears robust, buoyed by the escalating need for sophisticated chips as AI continues to evolve. In the last quarter, high-performance computing products constituted 57% of its total revenue, underscoring its critical role in the tech landscape. The company has invested heavily over the years, enabling it to fulfill substantial orders from various semiconductor firms. Last year alone, TSMC supplied over 11,000 different chips for hundreds of customers.
The company’s advanced 3-nanometer chips are expected to drive continued revenue growth, with analysts predicting earnings will rise at an annualized rate of 25%. Current market sentiment suggests that as long as the stock maintains a forward price-to-earnings multiple of around 30, investors could see their investments potentially double over the next five years. Notably, even those who invested at the peak of the previous cycle in late 2021 have more than doubled their money despite a significant share price decline in 2022.
On the other hand, CrowdStrike Holdings has solidified its position as a leader in the cybersecurity domain, which is becoming increasingly critical as AI-driven cyberattacks grow more sophisticated and damaging. Over the past year, the company’s stock has surged by 82%, driven by its expanding revenue, which has doubled from $1.8 billion to over $4.3 billion in just three years. CrowdStrike reported a 21% increase in revenue year-over-year in its most recent quarter.
CrowdStrike’s competitive advantage stems from its extensive data collection over more than a decade, which enhances its AI capabilities for threat detection. The Falcon platform leverages trillions of data points to identify and mitigate threats efficiently. The company has seen remarkable growth in large deals; the number of contracts worth over $10 million doubled year over year, now serving 800 customers with annual recurring revenue exceeding $1 million.
Although investors currently pay a high earnings multiple for CrowdStrike, this reflects optimistic expectations for its growth as businesses increasingly seek solutions to guard against AI-enhanced cyber threats. Management has projected at least 40% year-over-year growth in annual recurring revenue for the latter half of the year. As AI technologies introduce new security challenges, investing in CrowdStrike is shaping up to be a strategically favorable long-term choice.
As both TSMC and CrowdStrike navigate their respective markets, they exemplify how strategic investments in industry leaders can yield substantial returns. With AI continuing to reshape the technological landscape, opportunities for wealth-building remain ripe for those willing to invest in innovation.
