There's no shortage of great companies to invest in, but narrowing down your decision to just a couple of top stocks can be difficult. Volatility in the market earlier this year has left some investors wondering which companies have the stability, growth prospects, and lead in their respective markets to be long-term winners.
If you're searching for two such companies, I think Taiwan Semiconductor Manufacturing (TSM 0.84%) and Amazon (AMZN +0.55%) fit the bill perfectly. Both dominate their niches and are tapping into long-term trends that should keep their businesses humming for years to come. Here's why.
Image source: Getty Images.
1. Taiwan Semiconductor continues to benefit from AI chip demand
It's hard to escape the constant drumbeat of artificial intelligence (AI) news, but there's a good reason it's getting so much attention. AI could add nearly $16 trillion to global GDP by 2030, according to PwC data, and it's transforming industries at a rapid pace.
Technology companies are racing to integrate AI into their products and services at breakneck speed, fearing that if they don't, they'll be left behind. That's causing tech giants, including Nvidia, Microsoft, Amazon, Alphabet, and others, to invest trillions of dollars into data centers with advanced processors.
This is where Taiwan Semiconductor (often referred to as TSMC) comes in. The company is the leader in advanced semiconductor manufacturing, holding nearly 90% of the market, and it's resulting in gangbuster growth.
NYSE: TSM
Key Data Points
Artificial intelligence sales are expected to double this year, according to management, and consensus estimates from analysts put the company's total sales at $4.2 billion for fiscal 2026, up 16% from the previous year.
What's more, TSMC is very profitable, with earnings rising 53% to $2.12 per American depositary receipt (ADR) in the most recent quarter.
Some people have worried that demand for high-performance AI processors will cool down, but so far that hasn't happened. Tech companies appear to be locked into an AI race that has them vying for the best infrastructure available, which means spending to build new data centers and upgrade older ones with TSMC-manufactured processors.
2. Amazon's cloud computing and advertising businesses are driving growth
Amazon might be easy to overlook because other tech players with more direct exposure to AI, like Nvidia, are getting a lot of attention. But Amazon is benefiting from the AI boom as well with its Amazon Web Services (AWS).
AWS is the largest public cloud company with about 30% of the market, leading Microsoft's 21% and Google's 12%. This is notable because companies are ramping up their need for AI services, and that's pushing demand for AWS higher.
Artificial intelligence demand will push total cloud computing revenue to an estimated $2 trillion by 2030, according to Goldman Sachs, and AWS is already benefiting. Its sales rose 17% in the first quarter to $29.3 billion and generated $11.5 billion operating income -- which was twice Amazon's e-commerce figure.
NASDAQ: AMZN
Key Data Points
Amazon is also benefiting from its fast-growing advertising business, which increased sales by 18% in the quarter to nearly $14 billion. That makes advertising Amazon's fastest-growing revenue segment, and there's likely more on the way. An estimate by eMarketer says the company could take 17% of U.S. digital ad spending by 2027, up from less than 12% in 2022.
Keep this in mind with both stocks
There's been a lot of uncertainty in the market over the past several months, but that doesn't mean you should avoid buying great stocks. Amazon and Taiwan Semiconductor have established themselves as leaders and are continuing to benefit from their ability to outpace their rivals. While there could be short-term ups and downs with their share prices, investors who buy and hold for the long term will likely be rewarded.
