Forget the "Magnificent Seven." How about the Incredible Eight? – THE BHARAT EXPRESS NEWS – The Bharat Express News
The “Magnificent Seven” was a phrase coined by CNBC’s Jim Cramer to group the most dominant stocks in the market. The seven stocks are:
Microsoft
Apple
Nvidia
Alphabet
Amazon
Meta platforms
Tesla
While this is a solid list, I think there is one incredibly important company missing. If this company didn’t exist, these seven companies wouldn’t look the same.
So instead of the Magnificent Seven I propose the Incredible Eight, which Taiwanese semiconductor (NYSE:TSM) to the cohort.
Table of Contents
With a market capitalization of $900 billion, TSMC is the seventh-largest company on the U.S. stock market, surpassing Tesla, which is worth $585 billion.
Taiwan Semiconductor is a chip foundry, meaning that companies design chips and then outsource the manufacturing to Taiwan Semiconductor, which has the expertise to make them. The company is a leader in this sector, with industry-leading 3 nanometer (nm) chip technology that allows it to produce the most powerful chips possible today. Additionally, TSMC has a culture of continuous innovation, with the next generation of 2nm chips scheduled to launch sometime in 2025.
While TSMC doesn’t name all of its customers, every member of the Magnificent Seven is a direct or indirect customer. That’s a great position to be in, and a TSMC investment gives investors the chance to benefit from all of the technological innovations of the original Magnificent Seven.
And there are multiple catalysts ready to give things a boost.
In Apple’s latest announcement, it launched Apple Intelligence, its take on artificial intelligence (AI). The kicker in this announcement was that only the latest generation of iPhones and newer will have access to this technology, so consumers will have to upgrade to gain access to this feature. For the past three years, Apple has essentially made up a quarter of TSMC’s revenue, so if this starts an upgrade cycle, TSMC will benefit greatly.
This is a big relief, as 38% of TSMC’s revenue in the first quarter came from the smartphone segment, which saw a 16% quarter-on-quarter decline in revenue. Given how important smartphones are to TSMC’s business, it’s crucial that this area changes.
Another division, AI, is also starting to shine. Management is predicting a 50% compound annual growth rate (CAGR) for AI-related hardware over the next five years. After that catalyst is complete, it predicts it will account for about 20% of total revenue.
That is a huge growth in a segment that is just emerging. It is essential to get in before the lion’s share of that growth occurs.
Both factors support management’s long-term objective of growing revenue at a CAGR of 15% to 20% in the near future.
It’s rare to find a company that consistently delivers this kind of growth over the long term, but Taiwan Semiconductor is well positioned to do so. That’s why I think it’s one of the best stocks to buy now and hold for the long term.
One small caveat to this story is that Taiwan Semiconductor shares aren’t the cheapest, trading at 28 times expected earnings.
Taiwan Semiconductor’s long-term stock price is simply too good to ignore, and every investor should consider owning some shares. While I don’t know if the Incredible Eight will become a trend, I think adding Taiwan Semiconductor to this group makes sense.
Before you buy Taiwan Semiconductor Manufacturing stock, you should consider the following:
The Motley Fool Stock Advisor team of analysts has just identified what they think is the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could deliver monster returns in the years to come.
Think about when Nvidia made this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $771,034!*
Stock Advisor offers investors an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks each month. The Stock Advisor has service more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns as of July 2, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former chief market development officer and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet, Amazon, Meta Platforms, Taiwan Semiconductor Manufacturing and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Forget the “Magnificent Seven.” How about the Incredible Eight? was originally published by The Motley Fool
