GET IN EARLY! I'm Buying This AI Chip Stock (Even Over NVIDIA Stock)

Ticker Symbol: YOU•Jan 18, 2026

Summary

Alex presents a thesis that TSMC is the primary beneficiary of the AI boom, acting as the 'foundry to the world' for giants like Nvidia, Apple, and AMD. He explains that TSMC manufactures approximately 90% of all chips at the 5-nanometer node and below, creating a competitive moat that Intel and Samsung currently cannot breach due to lower production yields. Alex highlights that TSMC's 54% operating margins make it more profitable than most software companies, and he identifies the upcoming 2-nanometer production cycle as a major growth catalyst for 2025 and 2026.

Beyond basic manufacturing, Alex emphasizes TSMC's 'chokehold' on advanced packaging technologies like CoWoS and SOIC, which are critical for high-performance AI hardware. He addresses the geopolitical risk of a potential Chinese invasion of Taiwan, noting that while significant, this risk is unavoidable for any investor in the modern tech market. Alex concludes that TSM is significantly undervalued compared to its peers, with a price target of $470 per share, representing approximately 36% upside.

TSM (Taiwan Semiconductor Manufacturing Company): Alex emphasizes that TSM controls the production of nearly all advanced AI and smartphone chips, giving them immense pricing power. He points to their 54% operating margins and the fact that their 2nm capacity is already effectively sold out to major clients like Apple and Nvidia. He sets a price target of $470 per share and views the current valuation as a bargain compared to the industry average.

INTC (Intel): Alex highlights that Intel is currently struggling to compete, with yields on their advanced nodes sitting at roughly 65%, meaning one in three chips is defective. He points out that Intel's valuation metrics are skewed due to poor earnings, making it a much riskier and less efficient play than TSM. He suggests Intel is at least a full generation behind TSM in high-volume production of advanced packaging.

ASML: Alex describes ASML as the sole provider of the critical EUV lithography machines that TSMC uses to print transistors. He uses the analogy that if TSMC is the kitchen, ASML provides the essential 'ovens' needed to cook the chips. He mentions ASML as another stock he covers, noting its indispensable role in the semiconductor ecosystem.

Mentioned Stocks

INTC

Sentiment: SELL

Reasoning: Alex notes that Intel's advanced node yields are only 65%, leading to high waste. He also points out an extremely high PE ratio (over 1,000) and states they are behind TSMC in advanced packaging technology.

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ASML

Sentiment: BUYAction: RECOMMENDED

Reasoning: Alex describes ASML as the only company capable of supplying the EUV lithography machines and specialized mirrors required for advanced chipmaking, making it a critical partner for TSMC.

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TSM

Sentiment: BUYAction: RECOMMENDED

Reasoning: Alex identifies TSM as the most powerful AI company with a 90% market share in advanced nodes. He cites strong 54% operating margins, a 25.5% YoY revenue growth, and an attractive PE ratio of 26 versus the industry average of 44. He sets a price target of $470 per share.

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