Two Notable Shares to Maintain for the Ensuing Decade
In the rapidly evolving landscape of technology, two giants – Taiwan Semiconductor Manufacturing (TSM) and Amazon (AMZN) – are set to capitalise on the secular megatrends in Artificial Intelligence (AI) and cloud technologies over the coming decade.
Taiwan Semiconductor Manufacturing (TSM), a key supplier for tech giants investing in data centers with advanced processors, has established itself as a dominant force in the semiconductor manufacturing market. Holding nearly 90% of the market share in advanced chip production, TSM is the exclusive manufacturer of critical AI hardware such as NVIDIA's H100 and H800 GPUs and AMD's MI355X AI chips. These partnerships underpin significant revenue growth linked to the AI boom.
TSMC's long-term growth is propelled by its market dominance and growth prospects in AI. Analysts project TSM's AI-related revenue to grow at a 45% compound annual growth rate (CAGR) through 2030, potentially reaching $90 billion by 2029. The company's broad product range and customer base, spanning advanced, specialty, and packaging services, provide diversification and resilience in a fast-evolving market.
Amazon, on the other hand, benefits from its cloud computing leadership through Amazon Web Services (AWS). AWS is the dominant player in cloud infrastructure, benefiting from the surge in demand for AI model training, deployment, and scalable cloud computing. Amazon incorporates AI across its retail, logistics, and cloud businesses, enhancing operational efficiency and customer experience, which drives growth in cloud AI workloads and consumer engagement.
Amazon's advertising platform, leveraging vast customer data from its e-commerce ecosystem, is rapidly growing as an advertising channel, increasingly competing with Google and Meta, making it a key long-term growth area.
In the first quarter of 2023, AWS sales rose 17% to $29.3 billion and generated $11.5 billion operating income. Amazon's fast-growing advertising business increased sales by 18% in the quarter to nearly $14 billion. Amazon is estimated to take 17% of U.S. digital ad spending by 2027, up from less than 12% in 2022.
Total cloud computing revenue is estimated to reach $2 trillion by 2030, according to Goldman Sachs. AI could add nearly $16 trillion to global GDP by 2030, according to PwC data.
In summary, TSMC’s long-term growth is propelled by its semiconductor manufacturing dominance and deep exposure to AI hardware demand, while Amazon’s growth is driven by its cloud computing leadership, AI integration, and expanding advertising platform. Both companies are positioned to capitalise on the growth potential in AI, cloud technologies, and advertising markets over the coming decade.
Taiwan Semiconductor Manufacturing (TSM) experienced a 53% increase in earnings in the most recent quarter, reaching $2.12 per American depositary receipt (ADR). Analysts estimate TSM's total sales for fiscal 2026 to be $4.2 billion, up 16% from the previous year. Despite short-term ups and downs in Amazon's share prices, long-term investors are likely to be rewarded.
With the demand for AI services pushing demand for AWS higher and the demand for AI chips being a long-term trend, both TSMC and Amazon are considered stable and promising long-term investment options.
- Taiwan Semiconductor Manufacturing (TSM), with its dominance in the semiconductor manufacturing market and significant revenue growth linked to the AI boom, offers a promising long-term investment opportunity.
- Amazon, driven by its cloud computing leadership, AI integration, and expanding advertising platform, positions itself as a potential long-term investment choice, particularly due to the surge in demand for AI model training, deployment, and scalable cloud computing.
- The growth potential in AI, cloud technologies, and advertising markets over the coming decade, as well as their interconnected nature, make TSMC and Amazon, with their strong positions in these sectors, attractive options for investors seeking long-term returns.
