These 3 Chip Stocks Could Outperform Nvidia Over the Next 5 Years


  • These chip stocks could have what it takes to challenge, and potentially outperform, Nvidia (NVDA).
  • Advanced Micro Devices (AMD): The current valuation of this semiconductor manufacturer is more favorable than its peers.
  • Taiwan Semiconductor (TSM): With an overall market share that surpasses 57%, the business today holds an impressive lead in the semiconductor sector.
  • ASML (ASML): Over the past few months, the company’s shares on ENXTAM have experienced a considerable increase of more than 20% in their price.

This year, Nvidia (NASDAQ:NVDA) has performed remarkably well. Although the chip stocks sector has been surging, Nvidia’s expansion has been faster than the sector and other chip stocks in the market. For those who follow the chip company, and its focus on high-performance chips, that should be no surprise. Indeed, Nvidia is a leader in providing the key infrastructure for the AI revolution, and other key growth areas of the market. That said, there are other options investors may want to consider over the next five years. Here are three chip stocks I think can challenge Nvidia, and potentially outperform this stock, over this time frame.

AMD Advanced Micro Devices $89.37
TSM Taiwan Semiconductor $84.30
ASML ASML Holdings $636.86

Chip Stocks: Advanced Micro Devices (AMD)

Sign of AMD office in Markham, Ontario, Canada. Advanced Micro Devices, Inc. is an American multinational semiconductor company.
Source: JHVEPhoto /

One of the top chip stocks challenging Nvidia in the high-performance space is Advanced Micro Devices (NASDAQ:AMD). With the launch of the latest generation of Ryzen processing units, this is a company that’s an innovator. Indeed, these products have proven popular with players as well as other users.

AMD has expanded its market presence, becoming among the leading chip stocks, known for its Ryzen CPUs and GPUs for personal computers. Additionally, the business has substantially expanded its integrated solutions and information center segments, and is well-positioned to succeed in the AI market. Thus, as far as competitors in the AI race are concerned, AMD is certainly one of the top contenders investors should consider. 

The company’s sales increased by 44% to $23.6 billion in 2022, its financial year, notwithstanding the challenging economic environment. This was primarily due to its focus on key segments that have shown high profitability.

Since their introduction in 2017, AMD’s Ryzen CPUs have enjoyed immense popularity, enabling the business to overtake its main rival, Intel (NASDAQ:INTC), in sales steadily. AMD’s share of the marketplace for CPUs has increased from 17.8% to 35.2% over the past 6 years, whereas Intel’s has decreased from 82.2% to 62.8%.

AMD may be considered a better purchase than its competitors, Nvidia and Intel, in the tech industry, which is renowned for its abundance of growth stocks. This bolsters the case for investing in AMD’s stock.

Taiwan Semiconductor (TSM)

image of TSM semiconductor office building
Source: Sundry Photography /

Taiwan Semiconductor (NYSE:TSM) has seen some impressive sequential growth over the past five years. However, the company’s more recent quarterly results have shown a dip in revenue, signaling some bumpiness in the global chips market.

Tawian Semi is among the largest and most advanced outsourced chip makers globally. Thus, the company’s Q1 results released on Apr. 20 were closely-watched by many who follow chip stocks. The company’s revenue, which rose 3.6% year-over-year to 508.63 billion New Taiwan Dollars ($16.72 billion), but still fell short of analysts’ expectations by $170 million.

Additionally, the company’s profit margin also decreased from 52% in the fourth quarter to 45.5% in the first quarter. Notably, a further dip to between 41.5% and 43.5% is anticipated for the second quarter. This means the semiconductor market has yet to reach its lowest point, and TSMC is still experiencing the slowdown effects.

That said, over the long-term, Taiwan Semi has what it takes to continue to grow its dominance in the chip sector globally. This is a company with a nice mix of chips, used in a wide range of industries. And as the company introduces its 3 nanometer chips this year, and 2 nanometer chips in 2025, I think the company has much to gain in this race. There’s a reason why so many investors are confident in TSMC’s future. I’m one of them.

ASML Holdings (ASML)

Closeup of mobile phone screen with ASML logo on computer keyboard
Source: Ralf Liebhold / Shutterstock

ASML Holdings (NASDAQ:ASML) is the dominant manufacturer of lithography systems, responsible for producing equipment that accurately engraves circuit patterns onto silicon wafers. Furthermore, ASML is the only company in the world that makes EUV lithography systems essential for manufacturing the most advanced, dense, and energy-efficient chips.

ASML dominates the capital-intensive extreme ultraviolet (EUV) systems market with its $200 million machines and exclusive technology, making it a leading player in the semiconductor industry. It doesn’t face any competition in this segment, and its customers include big names like Taiwan Semiconductor Manufacturing, Intel, and Samsung. In addition, ASML also offers deep ultraviolet (DUV) systems to diversified chipmakers like Texas Instruments.

ASML projects a year-over-year revenue increase of 20% to 30% in Q2 2023, coupled with a gross margin growth of 49.1% to 50% to 51%. Additionally, it projects a yearly earnings increase of at least 25% and a modest gross profit increase.

By 2030, ASML wants to generate 44 billion and 60 billion euros ($48.2 billion and $65.8 billion) in sales. This demonstrates the business’s trust in its capacity to profit from semiconductor technology in the near future, which will be crucial for companies in various sectors.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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