10 Best Stocks to Buy and Hold For The Next Decade

4. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Number of Hedge Fund Holders: 156

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) ranks fourth on our list of the best stocks to buy and hold for the next decade. TSMC is a semiconductor manufacturing and design company. The leading fabrication entity makes chips for tech giants including Nvidia and AMD.

TMSC expects its 2024 capital expenditure budget to lie between $30 billion and $32 billion. Of this, 70% to 80% of the budget will be allocated to advanced process technologies, nearly 20% will be directed to specialty technologies, and 10% will be spent on advanced packaging, testing, and mass-making. Recently, TMSC formed a joint venture with Robert Bosch GmbH, Infineon Technologies AG, and NXP Semiconductors N.V. to launch a semiconductor fab in Dresden, Germany. The joint venture, European Semiconductor Manufacturing Company (ESMC), will be the EU’s first Fin-FET capable pure-play foundry, positioning TMSC as a leader in the industry.

In the second quarter of 2024, the company’s revenue increased by 13.6% sequentially, led by growing demand for its nanometer technologies. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) expects revenue from AI chips to increase at a compound annual growth rate (CAGR) of 50% by 2027. For the year ended 2024, TSMC projects a 20% growth in revenue, again driven by the demand for chips used in artificial intelligence.

Despite macro headwinds, the company projects strong growth for the stock in the coming years thanks to the growing demand for AI. Analysts are bullish on the stock and their 1-year median price target of $209 points to a 12% upside from current levels.

Diamond Hill Capital stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2024 investor letter:

“On an individual holdings’ basis, top contributors to return in Q2 included our long positions in Alphabet, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and Microsoft. Semiconductor manufacturer Taiwan Semiconductor’s (TSMC) fundamentals remain solid as demand for its chips continues growing — particularly as the machine learning and cloud computing trends gain more traction.”