Meet the high-growth stocks that could join Apple, Nvidia, Microsoft and Alphabet in the $2 trillion club by 2028.

Artificial Intelligence (AI) has been all the rage in the last couple of years and its adoption has been growing at a rapid pace. This, in turn, has led to increased sales, profits and, as a result, market capitalization of some of the most famous companies in the world. Indeed, six of the seven most valuable companies in the world come from the “Magnificent Seven,” a group of companies with an inextricable link to artificial intelligence.

The list is headed by four of the world’s leading developers of technologies focused on artificial intelligence. Apple tops the chart with $3.4 trillion. Nvidia, MicrosoftAnd Alphabet They close the quartet with a market value of $3.2 trillion, $3 trillion and $2.16 trillion, respectively.

With a market capitalization of approximately $977 billion (as of this writing), it may seem a little premature to predict that Taiwan semiconductor manufacturing (TSM -2.03%)often referred to as TSMC, will soon be eligible to become a member of this exclusive fraternity, but the company has all the trappings of success. The adoption of artificial intelligence continues to grow, and demand for the advanced semiconductors that power these complex algorithms has skyrocketed. As the world’s largest foundry company, TSMC is the world’s largest supplier of next-generation processors, so its ascension into this prestigious club seems inevitable.

Side of chips

TSMC has been a leading semiconductor supplier for more than three decades, but the emergence of artificial intelligence has brought the company out of the shadows.

Management describes TSMC as “the world’s largest and best semiconductor foundry,” which explains why it is a key player in the accelerating adoption of artificial intelligence. These systems require state-of-the-art semiconductors, which puts TSMC in an advantageous position. The client list helps illustrate its advantage, as it includes industry leaders such as Nvidia, Arm Holdings, Advanced microdevices, BroadcomApple and others.

Moreover, while the processors used in smartphones once made up the majority of its fortune, high-performance computing (HPC) and artificial intelligence now account for 51% of TSMC’s revenue.

His results are instructive. Revenue rose 36% year over year to $23.5 billion in the third quarter, and earnings per share (EPS) of $1.94 jumped 54%. Management expects the company’s rapid growth to continue and expects fourth-quarter revenue to be $26.5 billion, in line with the midpoint of guidance, or growth of approximately 35%. This forecast may well be conservative. In September, the company reported that revenue grew 40% year over year, significantly beating management’s forecasts.

Finally, TSMC produces about 90% of the world’s most advanced semiconductors, which will likely continue to fuel its AI-focused growth.

Path to $1 Trillion

As the world’s largest semiconductor manufacturer, TSMC plays a critical role in the development of artificial intelligence. None of its competitors can even come close to the same technological advantage it has in producing the world’s most sought-after artificial intelligence processors. Additionally, the company’s accelerating revenue growth helps illustrate the opportunity ahead. This also suggests that TSMC will rise into the ranks of multi-trillionaires.

TSMC projects revenue of $89.41 billion in 2024, giving it a forward price-to-sales (P/S) ratio of approximately 10.9, according to Wall Street. Assuming P/S remains constant, TSMC will have to increase its revenue to approximately $183 billion annually to maintain a $2 trillion market cap.

The company’s forecast calls for annual growth of about 29% in 2024, and Wall Street agrees: Analysts expect revenue growth of 29% and 26% in 2024 and 2025, respectively. If the company can overcome these hurdles, it will likely reach a market capitalization of $2 trillion by early 2028. However, the rapid spread of AI suggests that this could happen even sooner. Moreover, the continued rise of the smartphone industry will also benefit TSMC.

According to global consulting firm McKinsey & Company, generative artificial intelligence will bring the global economy between $2.6 trillion and $4.4 trillion annually over the next decade. However, estimates of the impact of AI continue to grow as new use cases are identified.

Finally, TSMC is attractively priced at 30 times earnings, especially when viewed in light of its ongoing capabilities.

Suzanne Frey, chief executive of Alphabet, is a member of The Motley Fool’s board of directors. Danny Vena holds positions at Alphabet, Apple, Microsoft and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 Microsoft calls and short January 2026 $405 Microsoft calls. The Motley Fool has a disclosure policy.