Investors Eye Tech Stocks Over Cryptocurrencies Amid Regulatory Concerns

The cryptocurrency market saw a brief surge following President Donald Trump’s electoral victory, as some investors anticipated a more lenient stance on crypto regulations and potential endorsements of certain tokens. However, rising tariffs, recession fears, and growing skepticism have led to a downturn in the value of many cryptocurrencies over recent months. Similarly, tech stocks have faced challenges, but their long-term prospects may be more promising based on practical use cases.

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In light of this, we will explore two tech stocks that could outperform cryptocurrencies in the coming years.

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1. Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing (NYSE: TSM) holds the title of the world’s largest semiconductor manufacturer and has greatly benefitted from the rising demand for chips driven by artificial intelligence. The company produces approximately 90% of the global AI processors, solidifying its pivotal role in the market.

Financially, Taiwan Semiconductor has reported impressive results. In the fourth quarter, which ended on December 31, the company’s sales shot up by 37% to $26.9 billion, while diluted earnings per share increased by 57% to $2.24 per American depositary receipt.

Despite some recent speculation about a decline in AI stocks, it’s premature to conclude that the AI boom is over. Major tech firms continue to invest heavily in AI software and services, ensuring a robust future for the demand for advanced semiconductors.

The CEO of Taiwan Semiconductor, C.C. Wei, highlighted this positive outlook in a recent earnings call, stating, “Even after more than tripling in 2024, we forecast our revenue from AI accelerators to double in 2025 due to the strong surge in AI-related demand.”

With a 15% decline in stock value after the recent tech sell-off, Taiwan Semiconductor shares are now priced at a relative discount, with a price-to-earnings ratio of 24.1, down from a P/E of 30 just six months ago.

2. Nvidia

Nvidia‘s (NASDAQ: NVDA) long-term outlook closely parallels that of Taiwan Semiconductor. Although Nvidia does not manufacture semiconductors, its chip designs comprise some of the most advanced AI processors available today.

The significant demand for Nvidia’s processors from tech companies has resulted in these accelerators now representing up to 95% of all AI chips globally. This surge has propelled Nvidia’s performance, showcasing a remarkable 78% increase in sales during the fourth quarter, reaching $39.3 billion, while diluted EPS grew by 82% to $0.89.

Moreover, Nvidia continued to see rapid growth, with management noting that the demand for its Blackwell AI processors is experiencing unprecedented speed and scale, resulting in $11 billion in sales in just one quarter.

While there is ongoing debate regarding the expected growth of data center spending in the coming years, such uncertainties are largely driven by current macroeconomic conditions, including recession fears. However, outlining the opportunity ahead is crucial, as PwC estimates that AI could contribute an additional $15.7 trillion to global GDP by 2030. Thus, advanced processors will be indispensable for tech companies striving to meet their AI ambitions.

Expectations surrounding Nvidia’s potential remain enormous, regardless of possible near-term economic slowdowns. Current concerns may be overshadowing the company’s long-term prospects.

Tech Offers Tangible Investments Compared to Crypto

While acknowledging that there are valid reasons for investors to consider cryptocurrencies, it’s evident that Taiwan Semiconductor and Nvidia present more stable investment opportunities. These two leading tech companies are actively contributing to an AI-driven future.

Nothing in investing is guaranteed; however, many cryptocurrencies remain speculative, while artificial intelligence is already an established field. Technology firms will continue to evolve around it for years ahead.

Should You Invest $1,000 in Taiwan Semiconductor Manufacturing Right Now?

Before purchasing stock in Taiwan Semiconductor Manufacturing, you might want to think carefully:

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Chris Neiger has no positions in any of the stocks mentioned. The Motley Fool recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.