To value AI stocks we look at whether the company has moats, eco system lock in, its growth rates, free cash flow rates & core earnings fundamentals.
I like $Taiwan Semiconductor Manufacturing(TSM)$ because it sits as the ultimate gatekeeper of modern technology. Nvidia, Broadcom, AMD & Apple cannot physically manufacture a single cutting edge chip without asking TSMC to build it for them.
TSMC commands a staggering 70% market share in the global foundry business. More importantly, when it comes to ultra advanced 3 nanometer & 5 nanometer chips required for AI & high performance computing, TSMC market share is almost 100%.
TSMC is a bargain when you consider its P/E ratio is only 24.3x. It also has an efficient 1.29 expected PEG ratio.
For investors, TSMC also pays a 1.2% dividend yield in addition to capital growth. That is why TSMC is my favourite.
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