In the world of ever-growing technology progress, investors are often on the hunt for the next big thing.
But what if I told you there were two firmly established tech titans that could have you grinning like a Cheshire cat for the next decade? I'm talking about Google parent Alphabet (GOOG -1.10%) (GOOGL -1.23%) and microchip manufacturer Taiwan Semiconductor Manufacturing Company (TSM -3.45%).
These storied silicon valley sweethearts (well, not literally, but you get my drift) have the secret sauce to make any investor's heart race. So let's dive in and find out why these two stocks are perfect for at least a decade's worth of buy-and-hold investing.
A semiconductor sovereign
Taiwan Semi, also known by the TSMC acronym, holds the crown as the world's largest contract chipmaker. That worthy wreath holds more than a few jewels.
With a razor-sharp technological edge, an industry-leading manufacturing capacity, and tight, long-term relationships with pretty much every semiconductor designer that matters, TSMC is a force to be reckoned with. More than half of its fourth-quarter sales came from the two most advanced chip-building technology platforms with 7-nanometer (nm) and 5-nm traces. Broken down a different way, smartphones and high-performance computing accounted for 80% of the quarter's revenues. In other words, demand for TSMC's services is so high that the company can focus on the most lucrative orders.
The global semiconductor market is growing faster than bamboo, especially now that the entire tech sector is coming back from a couple of years facing a worldwide shortage of manufacturing capacity. From cars and phones to healthcare equipment and barcode scanning systems, anything with microchips is starving for more processors. TSMC is ready to ride the tsunami of pent-up demand for semiconductors over the next several years. A scalable business model ensures it won't be left in the dust.
TSMC's innovation game is strong, and the regulatory environment may be challenging, but this company knows how to do business on both sides of the Chinese-American divide even in this heated environment.
Long story short, TSMC has already been a powerhouse for decades, and that sector-leading position continues to look secure in the foreseeable future. Color me surprised if Taiwan Semi's stock hasn't been good to its shareholders when you look back from 2033.
An alphabetical adventure
When it comes to digital dominance, there's no company quite like Alphabet. Starting with Google, the world's largest search engine, and the game-changing AdSense advertising network, Alphabet's market share and brand recognition are simply incomparable. Meta Platforms comes close in the digital ad market, thanks to the one-two punch of Facebook and Instagram, but I can't recommend that stock with a straight face until founder and CEO Mark Zuckerberg shows that the all-in bet on the Metaverse was a good idea. That's far from a foregone conclusion today.
Even in an inflation-tainted year with an even deeper dip in the all-important digital advertising industry, Alphabet delivered 10% year-over-year sales growth last year thanks to soaring sales in the Google Cloud business. Not only that, but Alphabet's cash machine is hard to beat. The business generated $283 billion of top-line sales in 2022, converting 21% of that haul into bottom-line earnings and 32% into operating cash flows.
Alphabet achieved those results in a down year. Now imagine what it can do when the global economy and online advertising opportunities turn sunny again. You don't want to be left on the sidelines when that rocket ship blasts off once more. And don't forget: Alphabet was literally built for longevity. Ten years is nothing when you're building a secular empire for the really long haul.
Two tech titans for a decade of wealth-building delight
Wrapping up, Alphabet and Taiwan Semiconductor Manufacturing Company form a fantastic duo of tech stocks that should keep investors smiling for the next ten years.
Due to impressive competitive advantages, sturdy financial results, and innovative business models, these companies are set to thrive in their durable and expanding target markets. As the global dependence on digital advertising and advanced semiconductor technologies continues to grow, there's no doubt that Alphabet and TSMC will stand tall as industry leaders for years to come.
Don't let this opportunity pass you by. These rocket ships are idling on the launch pad already. You should double-check everything I just said, as you would do with every investment idea, but I don't think you want to be left without TSMC and Alphabet shares in your pocket when the global economy gets back on its feet.
