In This Article:
Key Points
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Hypergrowth stocks can be huge winners in your portfolio.
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Taiwan Semiconductor Manufacturing is a leader in developing artificial intelligence (AI) computer chips.
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MercadoLibre dominates the online shopping market in Latin America.
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10 stocks we like better than Taiwan Semiconductor Manufacturing ›
Wall Street is a big believer in technology stocks at the moment. And who can blame them, with the rapid growth coming from areas of the market such as artificial intelligence (AI), cloud computing, and e-commerce?
Even after decades of growing online consumer spending, the market continues to expand. E-commerce still represents less than 20% of total retail spending in the United States, presenting a large tailwind for companies in the space. Meanwhile, generative AI models like ChatGPT have only been mainstream for about two years, yet the technology is already making big changes in the business world and in society overall.
These fast-growing industries are great places to look for opportunities as an investor. Here are two hypergrowth stocks to buy for your portfolio in 2025.
Powering higher with AI
The world is spending an absurd amount of money on AI data centers. That investment wouldn't be occurring without the help of Taiwan Semiconductor Manufacturing (NYSE: TSM). It is the world's leading producer of advanced computer chips, taking a majority market share in its industry as the go-to partner for major chip companies.
For example, companies like Nvidia design and sell computer chips for data center development. Large technology players such as Amazon are working on their own chips for cloud computing data centers as well. Even Apple is creating its own chips for smartphones and other devices. A large share of these chips are built by Taiwan Semiconductor Manufacturing, or TSMC for short.
Having such a dominant position in the industry has propelled TSMC's revenue growth higher and higher over the years. Last quarter, revenue increased 35% year over year in U.S. dollar terms, driven by the high-performance computing segment. This segment now makes up 59% of revenue for TSMC, a number that will likely climb along with the growth in AI spending around the globe.
With minimal competition, TSMC is able to command high prices for its advanced chips, which is why the company sports an operating profit margin close to 50%. Sales are up 247% in the last 10 years, a trend I believe can continue over the next decade as well. TSMC is a hypergrowth technology stock that is a great long-term buy-and-hold pick for your portfolio in 2025.