1 Stock That’s Just as Hot as NVIDIA (Without All the Hype)

Taiwan Semiconductor (NYSE:TSM) is doing big things in computer chips. Canadian companies like POET Technologies (TSXV:POET) are too.

AI microchip

Source: Getty Images

NVIDIA (NASDAQ:NVDA) is one of the hottest things on the stock market today. Up 2,600% in just a few short years, it has really got people talking. If you check out financial publications any day of the week, you’ll likely see several articles about NVIDIA on the front page. And the hype is mostly deserved: the company has a near-monopoly on AI graphics cards, and AI is the hottest industry on the planet right now.

However, there comes a point where ‘hot’ gets a little too hot – when a company is so popular it gets overhyped. When this happens to a stock, it often has to take a breather for a little while before regaining its footing. While I can’t say for sure that NVIDIA is overhyped just yet, I can say it’s getting there. In this article, I will explore an AI chip stock that’s just as hot as NVIDIA, but without the hype.

TSMC

Taiwan Semiconductor Manufacturing (NYSE:TSM), otherwise known as ‘TSMC,’ is a Taiwanese semiconductor company that – you guessed it – manufactures semiconductors. “Semiconductors” are metals used in the manufacture of computer chips. The term has become a shorthand way of referring to the computer chips themselves.

TSMC is, among other things, NVIDIA’s contract manufacturer. It shares in that company’s success. At the same time, it works with other companies. For example, TSMC manufactures Apple’s CPUs, which are being used in that company’s on-device AI processing. NVIDIA largely missed out on that part of the AI market.

TSMC has seen its revenue growth accelerate this year due to increased demand from customers like NVIDIA and Apple. In its most recent quarter, TSM’s revenue growth rate was 36%. TSMC’s growth rate has been rising in recent months, too, and the company is planning to increase production next year. So the growth looks likely to continue in 2025. Despite this, TSM stock trades at 26 times earnings, which is low by the standards of AI stocks.

A Canadian company that’s doing big things in semiconductors

You don’t need to look abroad to Taiwan to find companies doing exciting things in semiconductors. To the contrary, we have some right here in Canada!

Take Poet Technologies (TSXV:POET) for example. It’s a semiconductor/computer chip component company whose products are mainly used in photonics and image processing. It won the 2024 Global Tech Award for “Best in Artificial Intelligence.” Its products are used in AI accelerator and chip-to-chip applications.

Poet Technologies is not profitable yet, and its stock remains a very speculative one. Nevertheless, the company is doing work that’s getting noticed far beyond Canada. That alone merits giving POET a mention in this article as one of Canada’s AI chip success stories.

Foolish takeaway

When a stock gets hot, it’s hard not to take notice. NVIDIA is one such stock. At times, it can seem like everybody and their dog is talking about it. It risks getting overhyped. This makes looking for cheaper alternatives to it a worthwhile exercise. Taiwan Semiconductor Manufacturing is one such company. Maybe someday POET Technologies will be one, too.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has positions in Taiwan Semiconductor Manufacturing. The Motley Fool recommends Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

More on Tech Stocks

how to save money
Tech Stocks

Should You Buy Shopify Stock Hand Over Fist Before November 12?

Here are the top reasons why you may want to consider buying Shopify stock before its upcoming earnings event.

Read more »

stocks climbing green bull market
Tech Stocks

Why Propel Stock Keeps Going Up

Propel stock has seen a fivefold increase in its market cap in the last year! But even more is set…

Read more »

a-developer-typing-lines-of-ai-code-while-viewing-multiple-computer-monitors
Tech Stocks

Could Constellation Software Become the Next Berkshire Hathaway?

Constellation Software's (TSX:CSU) capital-allocation strategy is similar to that of Berkshire Hathaway (NYSE:BRK.B).

Read more »

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy With $1,000 Right Now

These three Canadian tech stocks could be among the best growth opportunities in the market right now.

Read more »

happy woman throws cash
Tech Stocks

3 Growth Stocks That Could Be Long-Term Wealth Creators

These three growth stocks aim to grow their financials at a higher rate than the industry average, thus delivering superior…

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is POET Technologies a Top AI Stock for Canadian Investors?

Canada has relatively few AI stocks, and the ones it has are different from American AI stocks in terms of…

Read more »

Rocket lift off through the clouds
Tech Stocks

2 Growth Stocks That Could Skyrocket in 2025 and Beyond

Wondering what types of stocks could rapidly rise in 2025? Check out these two stocks with substantial upside if they…

Read more »

up arrow on wooden blocks
Tech Stocks

The 3 Smartest Tech Stocks to Buy With $500 Right Now

Tech stocks can be seen as a bit risky, but these three have far less risk and more stability for…

Read more »