There is no denying that Nvidia (NASDAQ: NVDA) has been one of the top semiconductor stocks on the market in 2024, with stunning gains of 118% as of this writing. However, the recent stock price action indicates that investor confidence in this high-flying company is now wavering.
The past two-and-a-half months have been quite volatile for Nvidia investors, with the stock pulling back significantly. Moreover, it was surprising to see that the chip specialist’s latest quarterly report couldn’t turn investors’ sentiment in its favor despite better-than-expected numbers and healthy guidance for the current quarter.
One reason that may be the case is that Nvidia’s stunning surge since the beginning of 2023 has made it very expensive from a valuation perspective. The semiconductor stock has jumped a whopping 639% since the beginning of last year. Though it has justified this red-hot rally with outstanding growth quarter after quarter, it still trades at 27 times sales and 50 times trailing earnings.
Of course, Nvidia can justify its valuation with impressive growth in the coming quarters. However, valuation-led concerns could weigh on the stock. That’s why investors would do well to take a closer look at another semiconductor company that’s not only substantially cheaper than Nvidia but is also witnessing a nice acceleration in growth.
This semiconductor company is growing at a healthy clip
Taiwan Semiconductor Manufacturing (NYSE: TSM), generally known as TSMC, has enjoyed healthy gains of 56% on the stock market this year. Of course, while TSMC’s gains are nowhere near Nvidia’s, there is a good chance that the Taiwan-based foundry giant may upstage its more illustrious peer in the future.
That’s because TSMC’s growth has picked up nicely of late. The company recently reported its August sales figures and delivered a 33% year-over-year increase in revenue. It is also worth noting that TSMC’s revenue in the first eight months of 2024 increased by almost 31% from the same period last year. At this pace, TSMC is well on track to exceed the 26% revenue growth to $87.5…
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