Tesla (TSLA) continues to defy critics as it marches back toward a $1 trillion market cap. The electric vehicle (EV) maker has been parrying losses for much of the year amid struggling sales and CEO Elon Musk’s political activities.
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However, Musk has since said he will be spending more of his time with the company. Now, it can focus on Tesla’s EVs, robotaxis and humanoid robots as long-term catalysts.
While the future can bring many catalysts for Tesla, it isn’t the only stock that’s racing toward a $1 trillion valuation. In fact, there is one stock that could end up worth more than Tesla by the end of 2025.
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Taiwan Semiconductor Can Become More Valuable Than Tesla
Taiwan Semiconductor (TSM) is an artificial intelligence beneficiary that has a dividend yield of 1.24% as of June 13, and it’s got a shot at becoming more valuable than Tesla by the end of the year. Its market cap is approaching $930 billion. As AI tailwinds continue, it’s realistic that Taiwan Semiconductor could exceed a $1 trillion market cap by the end of the year.
Not only are the AI tailwinds picking up, but artificial intelligence has become quite the buzzword among investors. Companies that are remotely involved in the technology can generate more traction and see their stock prices rally. Taiwan Semiconductor isn’t just a small player, though. It supplies the key components that are necessary for the AI boom to take place.
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AI Demand Continues To Increase
The company helps manufacture the semiconductors that are necessary for AI, smartphones and other devices. Demand for all of these resources seems to be on the upswing, especially AI. In fact, it was highlighted by The Motley Fool as an AI stock that could be worth more than Tesla by the end of 2025.
Artificial intelligence is the bedrock for computers, smartphones, cloud computing, autonomous vehicles, humanoid robots and other high-demand resources. Corporations are scrambling to throw billions of dollars at AI chips and solutions to avoid falling behind on this technology.
Alphabet (GOOG, GOOGL) is one of the tech giants that is pouring money into artificial intelligence, and comments from CEO Sundar Pichai suggest high spending will never stop. He has repeatedly said that AI could be “more profound” than fire and electricity.
The way corporations have eagerly spent money on artificial intelligence suggests that Pichai is not alone in how he thinks. That bodes well for Taiwan Semiconductor, since it’s a critical pick-and-shovels AI play.
Financial Growth Continues To Impress
Taiwan Semiconductor also has strong financial growth that makes its bid for a $1 trillion market cap more realistic. The firm delivered 41.6% year-over-year revenue growth and 60.4% year-over-year diluted earnings per share growth in the first quarter. Those strong numbers also came with an impressive 43.1% net profit margin.
Commentary on the Taiwan Semiconductor press release suggests that the second quarter may be even better. That’s because smartphone demand was cited as a headwind, but AI products compensated.
“Our business in the first quarter was impacted by smartphone seasonality, partially offset by
continued growth in AI-related demand.” said Wendell Huang, Senior VP and Chief Financial Officer
of Taiwan Semiconductor. “Moving into second quarter 2025, we expect our business to be supported by strong demand for our industry-leading 3nm and 5nm technologies.”
Huang also mentioned that tariffs remain a risk, but customers’ behavior has not changed. Tariffs were the main reason many semiconductor stocks like Taiwan Semiconductor took a beating. If the impact of tariffs continues to be less than feared, TSM shares should continue to outpace the market.
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This article originally appeared on GOBankingRates.com: This Surprising Investment Could Earn More Than Tesla Stock by the End of 2025
