Finding a stock that can outright make you a millionaire isn't easy. However, they're out there. A $10,000 investment in Nvidia a decade ago is now worth $2.72 million. And $10,000 invested 12 years ago in Tesla is now worth more than $2 million. These companies were right under most investors' noses for a long time, but few people bought and held them through the ups and downs.
A bit of luck is involved in finding these companies, as few businesses hit it as big as these two. So, instead of finding a company that can outright make you a millionaire, it might be better to search for an investment that can accelerate your path to becoming one. You'll do well by focusing on stocks that can beat the market year in and year out.
For example, if you start with $10,000 and have annual returns of 10% (the market average) and 15% (an incredible growth figure), it will take 48 and 33 years, respectively, to become a millionaire. If you can find a stock that can return 15% or more annually, then you've found a huge winner.
One stock that can post that kind of growth over the next couple of years is Taiwan Semiconductor Manufacturing (TSM +0.11%), as it is a major beneficiary of many secular trends.
Taiwan Semi is a vital company
Taiwan Semiconductor is the world's largest contract chip manufacturer. TSMC has chip-producing capabilities in its foundries and manufactures chips for some of the world's most technologically advanced companies, like Apple and Nvidia.
It is always at the leading edge of technology, showcased by its 3 nanometer (nm) chips, which are the most capable chips available on the market. However, its 2nm chips are set to launch later in 2025, which will bring further revenue growth to the company.
NYSE: TSM
Key Data Points
Taiwan Semi's management has hold investors that it expects revenue to rise at a 15% to 20% compound annual growth rate (CAGR) "over the next several years." It's difficult for a stock to rise quicker than its sales growth rate over the long term, so seeing management's projection of this level of revenue growth indicates that its stock has the potential to gain at a high-teens percentage pace for many years.
One factor that could cause TSMC's growth to end up on the high end of that scale is artificial intelligence (AI) revenue. In the second quarter of 2023, management boldly predicted that AI-related revenue would increase at a 50% CAGR for the next five years and then make up a low-teens percentage of its total revenue. At that time, it accounted for about 6% of TSMC's revenue. However, management grossly underestimated the potential of AI.
In TSMC's latest earnings call, management updated its forecasts. For 2024, it expects AI revenue to triple and account for a mid-teens percentage of total revenue. That's a rapid acceleration from its previous projection. Furthermore, there are no signs of AI revenue slowing down, which bodes well for the case for TSMC's stock to rise at a rapid pace.
Growth looks strong for the next few years
Wall Street analysts are also bullish on TSMC's prospects.
TSM Revenue Estimates for Current Fiscal Year data by YCharts
Their projections for the next two years indicate 26% growth in 2025 and 18% growth in 2026. This backs up what management is saying and gives investors clues that the stock could see strong growth during the next few years.
Furthermore, the stock isn't all that expensive.
TSM PE Ratio data by YCharts
Although the stock was far cheaper at the start of 2024, 32.5 times trailing earnings and 28.9 times forward earnings isn't a bad price to pay for a tech leader like Taiwan Semiconductor. In fact, it's much cheaper than many big tech companies like Apple and Microsoft, which are growing much slower.
Although Taiwan Semiconductor may not be able to make you a millionaire outright due to its large size, it has the growth needed to post market-beating returns. Throw in a supercharged AI segment, and you have a recipe for a stock that is primed for a fantastic 2025.
