1 Artificial Intelligence (AI) Semiconductor Stock to Buy on the Dip Hand Over Fist Right Now (Hint: It's Not Nvidia or AMD)

Adam Spatacco, The Motley Fool

Fri, Mar 7, 2025, 2:15 PM 5 min read

Chipsets known arsenic graphics processing units (GPUs) are possibly the astir important hardware successful generative AI improvement close now. For the past mates of years, investing successful semiconductor stocks has mostly been a large thought -- arsenic you're astir guaranteed immoderate signifier of vulnerability to GPUs oregon information centers.

However, 2025 hasn't gotten disconnected to the champion commencement for spot stocks.

Whether it was play brought connected by Chinese start-up DeepSeek, U.S. President Donald Trump's caller tariffs, oregon lofty capitalist expectations, galore names successful the spot realm haven't fared truthful good this year. From a macro perspective, the VanEck Semiconductor ETF has dropped 4% truthful acold successful 2025 (as of March 3). When it comes to circumstantial companies, instrumentality Nvidia and Advanced Micro Devices, which person seen their stocks diminution by 7% and 17%, respectively, truthful acold this year.

While galore investors can't look to look distant from Nvidia oregon AMD, there's different banal that's been caught up successful broader selling successful the semiconductor scenery -- and I deliberation it's worthy buying the dip close now.

Let's research wherefore present looks similar a lucrative accidental to bargain Taiwan Semiconductor Manufacturing (NYSE: TSM) banal manus implicit fist.

When it comes to marque designation successful the spot market, investors don't request to look overmuch further than Nvidia and AMD. These 2 juggernauts pb the complaint successful the GPU revolution. Meanwhile, Broadcom plays an integral relation successful outfitting information centers with precocious chipware, portion Micron Technology's precocious bandwidth representation retention solutions are progressively important arsenic AI information workloads get bigger and much complex.

With truthful galore different names dominating headlines and talking points, I wouldn't beryllium amazed if you aren't adjacent alert of Taiwan Semi, oregon TSMC. The happening is that galore leaders successful the spot abstraction -- including Nvidia, AMD, and Broadcom -- should recognition Taiwan Semi for overmuch of their success.

TSMC specializes successful foundry solutions, which is fundamentally a fancy word that means it really manufactures chips and integrated systems for semiconductor companies. In different words, without TSMC, Nvidia's spot architecture would beryllium much of an thought than a tangible product.

Given however overmuch request there's been for GPUs implicit the past mates of years, it shouldn't travel arsenic a astonishment that Taiwan Semi's gross and profits are soaring. With that said, I deliberation the company's maturation is conscionable opening to footwear into gear.

Many of the "Magnificent Seven" companies, specified arsenic Microsoft, Amazon, Alphabet, and Meta Platforms, are exploring customized silicon arsenic a strategy to migrate from an overreliance connected Nvidia's chipware. These large tech giants, arsenic good arsenic ChatGPT shaper OpenAI, are reportedly collaborating with TSMC to assistance bring their visions to life.