TSMC data by YChartsDespite the solid returns, ASML boasts a higher P/E ratio of 39 compared to TSMC’s 33. It is crucial for investors to consider the valuation history of both stocks. Over the past five years, ASML has maintained an average P/E ratio of 43, indicating that it is currently priced relatively attractively. In contrast, TSMC has seen an average earnings multiple of 24 during the same period, suggesting that it may experience a pullback if business conditions deteriorate.
When it comes to choosing between ASML and TSMC, the valuation averages present a challenging decision. However, the prevailing belief is that investors are more likely to yield higher returns from TSMC. While ASML benefits from its relationship with TSMC, the fact that TSMC relies more on ASML could work in the former’s favor. Despite this, the declining revenue of ASML could be attributed to its current lower valuation.
Although TSMC may appear riskier due to its higher-than-average earnings multiple, the 33 times earnings multiple it currently carries is relatively modest for an AI stock. Additionally, in the midst of the AI boom, TSMC stands to profit from rapid revenue and earnings growth. This factor diminishes the risk associated with paying a premium valuation and is likely to result in superior investor returns in the future.
For those who have missed out on investing in top-performing stocks, there is an opportunity not to be overlooked. Periodically, expert analysts issue “Double Down” stock recommendations for companies they anticipate will experience significant growth. If you fear you’ve missed the boat on investing, the time is ripe to seize this chance before it slips away. Notable success stories include:
– Nvidia: A $1,000 investment in 2009 based on a “Double Down” recommendation would have yielded $352,417.
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Currently, “Double Down” alerts are being issued for three promising companies, presenting a rare and potentially lucrative opportunity. Act now to capitalize on this moment as similar opportunities may not arise again.
Disclosure: Will Healy holds positions in Advanced Micro Devices, Intel, and Qualcomm. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Intel, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends specific options and maintains a disclosure policy.
