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The Zacks Analyst Blog Highlights NVIDIA and Taiwan Semiconductor Manufacturing
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For Immediate Release
Chicago, IL – September 6, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: NVIDIA Corp. (NVDA - Free Report) and Taiwan Semiconductor Manufacturing Co., Ltd. (TSM - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
Which Chip Stock to Buy in a Murky September? NVDA or TSM
The advent of artificial intelligence (AI) helped Wall Street's darling semiconductor stock, NVIDIA Corp., witness a meteoric rise in the last few years. NVIDIA designs specialized chips and outsources the manufacturing to foundries like Taiwan Semiconductor Manufacturing Co., Ltd., better known as TSMC. So, in a way, these stocks complement each other; they aren't competitors.
The TSMC stock has also seen healthy gains so far this year. However, recently, a couple of factors weighed on NVIDIA's shares. Does this mean the TSMC stock is now more alluring compared to the NVIDIA stock? Let's have a look –
The Bullish Case for the NVIDIA Stock
Demand for AI models is here to stay for the long run as they are presently deployed across several verticals, including cloud computing. NVIDIA's chips are needed for AI models, which explains why the semiconductor giants' H100 graphic cards are the most desirable in the AI chip market.
Moreover, the largely anticipated next-generation Blackwell AI chips would provide NVIDIA a competitive edge over its peers since this chip's infrastructure platform can offer more AI throughput than the present Hopper platform. Simultaneously, NVIDIA's initiatives to penetrate the gaming market with GeForce and the industrial metaverse space in a tie-up with Siemens is a tailwind for the company.
The company's CEO, Jensen Huang also acknowledged that $1 trillion worth of data centers would migrate from central processing units to graphic processing units (GPUs). NVIDIA is the global leader in GPUs and its revenues from the data center business soared 154% year over year in the second quarter of 2025.
NVIDIA also approved a $50 billion share repurchase plan, a tell-tale sign of a healthy corporate organization (read more: NVIDIA Approves $50 Billion Stock Buyback: Time to Buy?)
NVIDIA Stock – Facing Short-Term Volatility
Despite the positives, the NVIDIA stock is facing bouts of volatility in September. The NVIDIA stock lately notched its worst two-day trading stretch in about two years after the Department of Justice subpoenaed the chipmaker regarding an antitrust investigation.
Anyhow, September is historically the worst month for the NVIDIA stock. NVIDIA's shares, on average, declined 2.4% in September compared to the S&P 500 and Nasdaq's decline of 1.2% and 0.9%, respectively, per the Dow Jones Market Data.
NVIDIA's latest promising quarterly results also failed to jack up its share price as it couldn't keep up with high expectations. After all, the NVIDIA stock has been the best performer on the S&P 500 so far this year (read more: The Best Chip Stock Post NVIDIA Earnings: NVDA, AMD or INTC?).
2 Reasons to be Bullish on the TSMC Stock
Unlike NVIDIA, the TSMC stock has fared much better in September and there are a couple of reasons to be positive on it. As more companies have started to implement AI features in smartphones, the demand for TSMC's chips is expected to increase. Apple Inc (APPL) is one of the primary clients of TSMC and the launch of iPhone 16 would surely boost demand for TSMC's chips.
The ever-growing demand for AI applications would help TSMC's sales improve in the upcoming years. Notably, demand for AI applications such as Open AI's ChatGPT and Alphabet Inc.'s (GOOGL) Gemini have increased substantially in recent times.
As a result, TSMC's earnings outlook for the present year looks encouraging, with the $6.45 Zacks Consensus Estimate for earnings per share up 11.4% year over year.
TSMC Stock – A Less Risky Bet
In early August, NVIDIA's shares took a beating after major tech players curtailed spending on AI. NVIDIA is heavily dependent on the AI industry and lacks diversification.
On the contrary, TSMC's customer base is not limited to the AI industry only. It is spread across the automotive and consumer electronic industries. This diversification insulates the TSMC stock from any industry-specific downturns and provides a steady stream of income.
TSMC Stock – More Pricing Power, Strategic Partnerships
The TSMC stock accounts for an astounding 90% of high-end chips in the global semiconductor market. This dominance gives the TSMC stock significant pricing power. When NVIDIA fails to meet the soaring demand for AI chips, TSMC can leverage its capacity to charge higher prices and increase profitability.
TSMC, by the way, is the exclusive manufacturer of Apple's AI chips, and this relationship should certainly lead to higher volume orders, boosting TSMC's revenues. However, NVIDIA's total dependency on data center AI chips means that any disruption in the AI industry would impact its business.
TSMC Less Pricey Than NVIDIA
The TSMC stock is less expensive than NVIDIA, which has given the integrated circuit foundry an upper hand over the semiconductor behemoth. This is because buying TSMC's shares won't burn a larger hole in your wallet than the NVDA stock.
After all, per the price/earnings ratio, the TSMC stock currently trades at 24.8X forward earnings. However, NVDA's forward earnings multiple is 39.1X.
The TSMC Stock to Buy Hand Over Fist
The TSMC stock is a better buy than the NVIDIA stock due to reasonable valuations, pricing power, tactical partnerships, diversification, and an inherent ability to exploit the growing demand for AI applications.
Well-known brokers have increased the average short-term price target of the TSMC stock by 27.6% from the company's last closing price of $160.49. The analysts have set the highest price target at $250, an upside of 55.8%.
The TSMC stock, thus, has a Zacks Rank #2 (Buy). But NVDA has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.
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Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights NVIDIA and Taiwan Semiconductor Manufacturing
For Immediate Release
Chicago, IL – September 6, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: NVIDIA Corp. (NVDA - Free Report) and Taiwan Semiconductor Manufacturing Co., Ltd. (TSM - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
Which Chip Stock to Buy in a Murky September? NVDA or TSM
The advent of artificial intelligence (AI) helped Wall Street's darling semiconductor stock, NVIDIA Corp., witness a meteoric rise in the last few years. NVIDIA designs specialized chips and outsources the manufacturing to foundries like Taiwan Semiconductor Manufacturing Co., Ltd., better known as TSMC. So, in a way, these stocks complement each other; they aren't competitors.
The TSMC stock has also seen healthy gains so far this year. However, recently, a couple of factors weighed on NVIDIA's shares. Does this mean the TSMC stock is now more alluring compared to the NVIDIA stock? Let's have a look –
The Bullish Case for the NVIDIA Stock
Demand for AI models is here to stay for the long run as they are presently deployed across several verticals, including cloud computing. NVIDIA's chips are needed for AI models, which explains why the semiconductor giants' H100 graphic cards are the most desirable in the AI chip market.
Moreover, the largely anticipated next-generation Blackwell AI chips would provide NVIDIA a competitive edge over its peers since this chip's infrastructure platform can offer more AI throughput than the present Hopper platform. Simultaneously, NVIDIA's initiatives to penetrate the gaming market with GeForce and the industrial metaverse space in a tie-up with Siemens is a tailwind for the company.
The company's CEO, Jensen Huang also acknowledged that $1 trillion worth of data centers would migrate from central processing units to graphic processing units (GPUs). NVIDIA is the global leader in GPUs and its revenues from the data center business soared 154% year over year in the second quarter of 2025.
NVIDIA also approved a $50 billion share repurchase plan, a tell-tale sign of a healthy corporate organization (read more: NVIDIA Approves $50 Billion Stock Buyback: Time to Buy?)
NVIDIA Stock – Facing Short-Term Volatility
Despite the positives, the NVIDIA stock is facing bouts of volatility in September. The NVIDIA stock lately notched its worst two-day trading stretch in about two years after the Department of Justice subpoenaed the chipmaker regarding an antitrust investigation.
Anyhow, September is historically the worst month for the NVIDIA stock. NVIDIA's shares, on average, declined 2.4% in September compared to the S&P 500 and Nasdaq's decline of 1.2% and 0.9%, respectively, per the Dow Jones Market Data.
NVIDIA's latest promising quarterly results also failed to jack up its share price as it couldn't keep up with high expectations. After all, the NVIDIA stock has been the best performer on the S&P 500 so far this year (read more: The Best Chip Stock Post NVIDIA Earnings: NVDA, AMD or INTC?).
2 Reasons to be Bullish on the TSMC Stock
Unlike NVIDIA, the TSMC stock has fared much better in September and there are a couple of reasons to be positive on it. As more companies have started to implement AI features in smartphones, the demand for TSMC's chips is expected to increase. Apple Inc (APPL) is one of the primary clients of TSMC and the launch of iPhone 16 would surely boost demand for TSMC's chips.
The ever-growing demand for AI applications would help TSMC's sales improve in the upcoming years. Notably, demand for AI applications such as Open AI's ChatGPT and Alphabet Inc.'s (GOOGL) Gemini have increased substantially in recent times.
As a result, TSMC's earnings outlook for the present year looks encouraging, with the $6.45 Zacks Consensus Estimate for earnings per share up 11.4% year over year.
TSMC Stock – A Less Risky Bet
In early August, NVIDIA's shares took a beating after major tech players curtailed spending on AI. NVIDIA is heavily dependent on the AI industry and lacks diversification.
On the contrary, TSMC's customer base is not limited to the AI industry only. It is spread across the automotive and consumer electronic industries. This diversification insulates the TSMC stock from any industry-specific downturns and provides a steady stream of income.
TSMC Stock – More Pricing Power, Strategic Partnerships
The TSMC stock accounts for an astounding 90% of high-end chips in the global semiconductor market. This dominance gives the TSMC stock significant pricing power. When NVIDIA fails to meet the soaring demand for AI chips, TSMC can leverage its capacity to charge higher prices and increase profitability.
TSMC, by the way, is the exclusive manufacturer of Apple's AI chips, and this relationship should certainly lead to higher volume orders, boosting TSMC's revenues. However, NVIDIA's total dependency on data center AI chips means that any disruption in the AI industry would impact its business.
TSMC Less Pricey Than NVIDIA
The TSMC stock is less expensive than NVIDIA, which has given the integrated circuit foundry an upper hand over the semiconductor behemoth. This is because buying TSMC's shares won't burn a larger hole in your wallet than the NVDA stock.
After all, per the price/earnings ratio, the TSMC stock currently trades at 24.8X forward earnings. However, NVDA's forward earnings multiple is 39.1X.
The TSMC Stock to Buy Hand Over Fist
The TSMC stock is a better buy than the NVIDIA stock due to reasonable valuations, pricing power, tactical partnerships, diversification, and an inherent ability to exploit the growing demand for AI applications.
Well-known brokers have increased the average short-term price target of the TSMC stock by 27.6% from the company's last closing price of $160.49. The analysts have set the highest price target at $250, an upside of 55.8%.
The TSMC stock, thus, has a Zacks Rank #2 (Buy). But NVDA has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.