The cryptocurrency market temporarily got a boost following President Donald Trump's electoral win, as some investors hoped his lighter approach to crypto regulation and outright promotion of certain coins would lift many digital tokens higher.
But the threat of tariffs, fears of a potential recession, and increasing pessimism from some investors have caused many cryptos to fall over the past few months. While tech stocks have suffered the same fate, I think the long-term potential in tech stocks is higher and based on more concrete use cases.
Here are two tech stocks that could end up ahead of crypto's gains in the coming years.
Image source: Getty Images.
1. Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (TSM +2.73%) is the largest semiconductor manufacturing company in the world and has already benefited immensely from the surge of chip demand from artificial intelligence. In addition to its general chip manufacturing dominance, it also makes an estimated 90% of the world's AI processors.
The financial results from Taiwan Semiconductor's chip-manufacturing lead have been phenomenal. The company's sales spiked 37% in the fourth quarter (ended Dec. 31) to $26.9 billion and diluted earnings per share surged 57% to $2.24 per American depositary receipt.
NYSE: TSM
Key Data Points
There's been a lot of talk about AI stocks falling lately, but it's far too premature to call the artificial intelligence boom over. Tech companies large and small are investing heavily in AI software and services and that will spur sales of advanced semiconductors for years to come.
Taiwan Semiconductor certainly thinks so, with CEO C.C. Wei saying on the recent earnings call that, "Even after more than tripling in 2024, we forecast our revenue from AI accelerators to double in 2025 as the strong surge in AI-related demand continues."
With Taiwan Semiconductor's stock down 15% after the recent tech sell-off, the company's shares are trading 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 (NVDA +3.75%) long-term potential is in the same vein as Taiwan Semiconductor's. While Nvidia doesn't manufacture semiconductors, its chip designs account for some of the most advanced AI processors on the market.
Tech companies have clamored to get their hands on Nvidia processors over the past few years, resulting in the company's accelerators accounting for up to 95% of all AI chips worldwide. The demand has boosted Nvidia's sales and earnings, including a 78% jump in sales in the fourth quarter to $39.3 billion and diluted EPS growth of 82% to $0.89.
NASDAQ: NVDA
Key Data Points
But Nvidia isn't done benefiting from all of this AI demand. Management said on the fourth-quarter earnings call that demand for its Blackwell AI processors is "the fastest product ramp in our company's history, unprecedented in its speed and scale," achieving $11 billion in sales in one quarter alone.
There's increasing debate as to how fast data center spending will grow (or not) in the coming years. A significant slowdown from tech companies buying advanced processors would certainly hurt Nvidia's sales and earnings. But investors seem mostly worried about macroeconomic effects right now, like a recession, and are carrying over those concerns to the tech sector.
While an economic slowdown would have an impact on tech companies, focusing too much on that and forgetting that we're still at the beginning stages of AI is a mistake. PwC estimates AI could add $15.7 trillion to the global GDP in 2030, and tech companies will need increasingly advanced processors to achieve their AI goals.
That means Nvidia still has a massive opportunity in the coming years, even if a temporary economic slowdown materializes. It also means that current worries could be clouding investors' view of Nvidia's long-term potential.
Tech is more tangible than crypto
I think there are some legitimate reasons for investors to own cryptocurrencies, but Taiwan Semiconductor and Nvidia offer investors a much more grounded investment as these two leading tech companies help build an AI future.
Nothing is guaranteed, of course. But while many cryptocurrencies are still very speculative, artificial intelligence is already well-established and technology companies will continue to build their companies around it for years to come.
